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UNIVERSITY  OF  ILLINOIS  LIBRARY  AT  URBANA-CHAMPAIGN 


AN  APPEAL 


TO  THE  PUBLIC 

ON  THE 

CONDUCT  OF  THE  BANKS 

IN  THE 


CITY  OF  NEW-YORK. 


BY  A CITIZEN. 


PRINTED, 
JVEW-YORK , DECEMBER,  1815, 
At  the  Office  of  the  New- York  Courier 


A HISTORY 


THE  CONDUCT  OF  THE  BANKS  IN  THE  CITY  OF  NEW- YORK, 

SINCE  THE  SUSPENSION  OF  SPECIE  PAYMENTS. 

BY  A CITIZEN  OF  NEW-YORIL 


The  advantages  which  many  flatter  themselves 
they  derive,  and  the  facilities  which  result  to 
all,  from  unrestrained  issues  of  a base,  and  there- 
fore a plentiful  currency,  will  render  it  difficult, 
when  that  currency  has  “ insinuated ” itself,  into 
all  the  pecuniary  transactions  of  society,  to  per- 
suade it  to  undergo  that  self  inflicted  and 
corrective  purgation,  in  which  alone  the  remedy 
is  to  be  found.  Those  who  make  this  currency, 
and  who  are  permitted  to  make  as  much  of  it, 
and  of  course  to  profit  as  much  by  it,  as  they 


which  originally  produced  them.  The  tenden- 
cy is  always  from  bad  to  worse. 

He,  therefore,  who  hopes  that  the  evils  of 
the  present  extensive  and  complicated  system 
of  paper  money,  will  cure  themselves , when  fos- 
tered by  indulgence,  and  even  cherished  as  use- 
ful, will  not  be  lost  for  want  of  belief  iu  the 
doctrine  of  miracles. 

To  all  other  evils,  when  once  acknowledged 
to  be  evils,  we  invariably  apply  what  we  deem 
remedies.  Criminals  we  imprison  ; unruly  chil- 


please,  must  be  endowed  with  extraordinary idren  we  chastise;  to  fevers  we  apply  medi- 


wisdom,  as  well  as  integrity,  to  forego  advan- 
tages which,  to  most  appear  so  palpable.  And 
those,  who  are,  from  the  nature  of  their  pursuits, 
in  daily  need  of  some  sort  of  currency,  may  be 
expected  to  cling  long  to  a base  one,  if  they  shall 
have  been  made  to  fear,  that  a pure  one  cannot 
be  produced  in  sufficient  abundance.  Much 
more  reluctant  will  they  feel,  to  abandon  the 
base  currency,  if  they  have  been  induced  tosus^ 
pect  that  the  pure  one  has  so  entirely  disap- 
peared, that  it  cannot  be  restored  to  the  uses  of 
business.  The  makers,  therefore,  and  the  users 
of  bad  money,  will  be  united;  and  they  consti- 
tute, with  us,  a very  stroBg  portion  of  the  com- 
munity. All  of  these  will  confess,  that  a base 
currency  is,  undeniably  and  indisputably,  a pub- 
's lie  evil ; but  will  insist, nevertheless,  that  it  is  im- 
possible  to  do  without  it.  Having  made  up  their 
„ minds  on  this  point,  they  go  a step  further,  and 
5 think  it  unnecessary  to  attempt  the  reformation 
£ of  the  acknowledged  evil.  And,  so  rapid  is  the 
progress  of  error,  when  supported  by  interest, 
that  very  soon,  you  will  find  them  enraged  with 
'ft  those  who  deem  the  evil  not  incurable,  and  who 
would,  therefore,  attempt  to  apply  the  remedy. 
“ Not  yet is  the  argument  Hereafter  we  shall 
£ better  be  enabled  to  do  it.  But  it  is  the  sinner’s 
^argument,  ending  in  a repentance  that  comes 
j^too  late,  a death  bed  repentance. 

Neither  in  the  physical  nor  the  moral  world, 
were  diseases  ever  known  to  be  removed  by  in- 
dulgence; rnueh  less  by  adding  to  the  causes 


ernes  ; from  undue  heat  we  retreat  to  the  cool 
shade;  and  from  the  biting  frost  we  are  reliev- 
ed by  genial  warmth.  For  all  other  evils  we 
seek  a remedy.  But  a base  currency,  an  evil, 
as  all  experience  a nd  history  prove,  most  ex- 
tensively and  durably  pernicious,  must  be  left 
to  itself:  it  will  cure  itself!  Nay,  it  will  be 
likely  to  find  a cure,  in  the  general  encourage- 
ment which  must  be  derived  from  the  general 
belief,  that  its  existence  is  necessary  ! At  no 
future  time  can  it  be  less  necessary  than  the 
present.  Progress,  by  increasing  the  distance, 
increases  also  the  difficulties  of  return. 

Our  condition  ia  this  respect,  however  deplo- 
rable, is  not  singular.  It  was  always  thus,  every 
where.  The  public,  every  where,  have  been 
always  so  unwilling  to  undergo  the  temporary 
inconveniences,  attending  the  reformation  of  a 
base,  but  plentiful  currency,  that  reformation 
has  scarcely  ever  been  attempted  ; reformation 
of  base  paper,  never.  It  has  been  reformed  only 
when  it  exploded.  But,  that  explosion  has  in- 
variably produced  effects,  infinitely  more  tre- 
mendous, than  the  inconveniences  that  would 
have  resulted  from  a regular  and  progressive 
system  of  reform. 

A Pamphlet  has  recently  appeared  in  this 
City,  entitled 

Letter  to  Albert  Gallatin , Esq.  on  the  doctrine  of 
gold  and  silver , and  the  evils  of  the  present 
banking  system , in  effect  and  tendency , By 
Pitblicola.  Printed  by  Gould  and  Fan 


X /E  /TV.  .Pelt  I 

IfeToOI 


4 


The  author  of  this  pamphlet,  is  a most  wel- 
come, because  he  is  a powe  fu!  auxiliary  to 
those,  who  wish  to  see  at  least  an  attempt  at  re- 
form. 

And  although,  we  cannot  agree  with  him  in 
the  ultimate  cause,  to  which  (with  some  hesita- 
tion, however,)  he  attributes  the  evil,  nor 
(which  would  be  almost  a thing  of  course)  in  th<= 
remedy  he  prescribes,  yet  his  work  has,  in  all 
other  respects,  so  much  merit, that  no  reader,  we 
venture  to  say,  can  rise  from  a perusal  of  it,  with- 
out great  pleasure,  and  much  instruction. 

Publicola  considers  the  depreciation  of  the 
paper  medium,  below  the  universal  standards, 
gold  and  silver,  an  evil.  He  ascribes  and  fairly 
traces  depreciation  to  excessive  issues,  as  its 
cause ; and  so  far  is  unquestionably  correct. 

“ To  d’velop^  with  accuracy  (says  lie)  the 
causes  pf  the  present  diseased  condition  of  our 
currency,  would  doubtless  afford  a clue  to  the 
remedy.  But  inquisitive  and  sagacious  men 
differ  in  opiuiou  respecting  them.  Seme  con- 
ceive that  the  ultimate  causes  were  the  loans 
to  government,  and  the  enormous  demand  for 
gold  and  silver  occasioned  during  the  war  by  the 
paucity  of  our  exports  and  comparative  roagni 
tudo  o*  our  imports.  Others  suppose  these  are 
proximate  causes,  and  that  the  source  of  the 
evil  lies  deeper.  My  own  feeble  opinion  coin- 
cides with  the  latter  class.  If  the  drain  was 
occasioned  by  the  excess  of  our  imports,  the 
suspension  of  specie  payment  demonstrates 
that  specie  had  not  been  provided  to  meet  the 
previous  issues  of  paper  ; that  our  Banks  were 
in  the  same  condition  as  the  Bank  of  England 
in  the  year  1797,  and  had  over  issued.” 

We  shall  endeavour  hereafter  to  prove,  and 
we  venture  to  say,  to  demonstrate,  that  the 
loans  made  ‘o  government  were  the  single  cause 
of  the  excessive  issues,  and  that  the  retention 
by  the  banks  of  the  stock  received  in  exchange 
for  their  notes,  was  the  cause  of  their  inability 
to  pay  specie. 

We  cannot  but  regret,  that  so  q,ble  a writer 
should  have  passed  so  lightly  over  a point  of  so 
much  importance.  For  if  our  opinion  be  cor- 
rect, the  removal  of  the  cause  would  of  course 
remove  the  disease. 

If,  however,  the  ultimate  object  of  the  writer 
was  rather  to  gain  converts  to  the  establish- 
ment of  a grand  national  bank,  than  to  relieve 
from  decripitude  the  state  banks,  which  exist 
already  ; we  are  not  disposed  to  detract  from 
the  address  and  ability,  exhibited  throughout 
the  work 


But  inasmuch  as  we  are  ffrmly  persuaded, 
that  bank  notes  we>  e furnished  to  government 
lo  an  amount  so  far  beyond  what  was  necessa- 
ry for  business , and  of  course  beyond  what  could 
be  kept  suspended  in  circulation,  as  to  produce 
an  excess  of  issues  ; and  that  such  excess  was  the 
cause  of  depreciation , we  are  constrained  to  in- 
sist, that  the  remedy  will  be  found  m curtailing 
this  excess,  and  may  be  effected  without  the 
establishment  of  a national  bank  ; although  such 
an  institution,  simple  in  its  construction  and 
well  administered,  might  afford  a great  se- 
curity against  the  evils,  which  this  writer 
exposes  with  consummate  ability. 

And  yet  w are  persuaded  he  has  gone  back 
to  first  principles,  and  displayed  in  regard  to 
♦hose,  a research  and  acuteness,  which  the  oc- 
casion did  not  require.  In  the  perusal  of  the 
following  plan  of  investigation,  the  reader  will 
and  our  author  not  less  daring,  than  a perusal 
of  the  book,  will  prove  him  powerful  in  his  la- 
bors. 

“ To  probe  the  evil  to  the  root,  we  must  in- 
quire why  banks  possess  the  power  to  suspend 
specie  payment,  and  by  what  means  they  can 
with  impunity  wield  that  power  and  ov  rstep 
their  cliai  tered  rights.  To  determine  the  ulti- 
mate causes  of  depreciation,  and  the  scarcity 
of  specie  we  must  analyse  doctrines  the  most 
intricate  in  the  range  of  political  economy. 
The  doctrine  o‘  money,  as  composed  of  specie 
and  of  paper;  the  principles  that  control  the 
introduction  of  gold  and  ilver  into,  and  their 
departure  from  a country ; their  fluctuations ; 
the  balance  of  trade  ; the  variations  between  the 
market  and  mint  price  of  gold  and  silver ; o°,  in 
other  words  the  reciprocal  vibrations  of  the  mo- 
ney unit  of  the  commercial  world,  and  that  of 
each  commercial  community  ; and  lastly,  the 
science  of  banking  in  its  three  great  divisions — 
Banks  of  deposit — Banks  of  circulation  and 
short  loans— Bauks  of  circulation  and  loans  in- 
differently long  or  short. 

Our  limits  (we  regret)  do  not  enable  us  to 
give  more  than  the  design  and  plan  ol  tne  work. 
But  we  earnestly  recommend  it  to  general  pe- 
rusal. There  are  few  men  to  whom  it  will  not 
give  some  new  and  important  ideas. 

That  powerful  efforts  will  be  made  to  com- 
pel the  banks  to  resume  specie  payments,  is 
not  to  be  doubted.  Courts  of  justice  have  been 
and  will  again  be  resorted  to.  But  the  subject 
though  cognizable  by  the  judicial  authorities, 
is  one,  ou  which  the  public  voice  will  ultimately 
decide.  It  will  rest  with  the  legislature.  It  is 


5 


©1*  great,  it  is  of  national  concern.  Its  magnitude 
seems  almost  to  defy  tlie  powers  oi  mere  distri- 
butive justice. 

It  will  rest  with  the  people  to  decide  whether, 
if  banks  can  pay,  they  shall  be  made  to  pay  ; 
or  whether  if  they  cannot  pay,  they  shall  be 
permitted  to  sell  their  bankrupt  credit  at  a re- 
gular and  undisturbed  profit,  until  like  all  paper 
of  like  sort,  it  sinks  to  nothing;  a mere  dead 
loss  to  the  unfortunate,  last  holder. 

We  shall  now  proceed  in  our  endeavours  to 
investigate  those  causes,  which,  in  our  judg- 
ment, first  produced  the  “ diseased  condition  of 
our  currency  and  of  those  also  which  have 
prevented  its  restoration  to  health.  In  per- 
forming this  duty,  for  we  esteem  it  imperative, 
neither  fear,  nor  delicacy  shall  prevent  us  from 
speaking  of  men  and  things,  as  they  are.  Aware 
that  we  shall  at  first  please  but  few,  and  per- 
haps irritate  many,  we  approach  the  subject 
with  a reluctance  which  nothing  but  a solemn 
conviction  of  the  necessity  of  discussing  it, 
could  have  overcome. 

The  struggle  for  American  independence 
forced  into  activity  all  the  resources,  phy- 
sical, moral  and  intellectual,  with  which 
Heaven,  in  its  benignity,  had  blessed  the 
United  States.  Even  these,  however, 
would  probably  have  been  unavailing,  if 
recourse  had  not  been  had  to  means,  the 
necessity  of  employing  which,  those,  who 
would  delight  to  behold  the  annals  of  Ame- 
rican patriotism,  unsullied  and  unstained, 
can  never  cease  to  lament.  We  are  not, 
however,  at  this  distance  of  time,  disposed  to 
open  wounds,  which  happily  have  ceased  to 
bleed,  by  detailing  the  unequal  effects  which 
the  final  extinction  of  the  supposed  value 
of  Continental  Money , produced  upon  the 
various  members  of  the  community.  But 
it  is  useful  to  remember  that  the  support  of 
that  kind  of  “ Current  Money”  for  we  had 
then  no  other,  was  by  all  considered  inse- 
perablv  connected  with  the  final  establish- 
ment of  our  independence.  The  nation 
was  not  induced  to  give  that  support,  by 
considerations  of  convenience  or  commer- 
cial profit,  merely,  but  by  every  considera- 
tion which  could  make  liberty  and  inde- 
pendence dear  to  them.  Yet,  experience 
has  proved,  not  only  that  it  could  not  be 
supported,  at  a moderate,  nor  even  a great 
depreciation,  but  that  it  could  not  be  pre- 
vented from  losing  entirely  all  estimation 
ef  value.  And  hence  will  appear  the  dan- 


ger, and  the  absurdity,  of  relying  upon 
what  the  common  and  universal  anxiety 
may  have  united  in  calling  and  desiring  to 
keep  up  as  money,  it  it  has  no  intrinsic 
value . 

One  wholesome  consequence,  however, 
followed  the  extinction  of  Continental  mo- 
ney. The  whole  community  long  felt  and 
expressed  a decided  distrust  ol  all  paper 
money  ; and  this  distrust  had  a most  salu- 
tary effect  upon  the  conduct  of  those,  who 
first  engaged  in  the  management  of  banking 
establishments.  The  first  bankers  had  strong 
jealousies  to  overcome,  for  suspicion  watch- 
ed them  with  eagle  eye  ; and  hence  in  their 
early  operations,  emissions  of  paper  were 
carefully  regulated  by  the  means  ol  the 
banks  to  redeem  it.  No  paper  was  issued 
unless  the  directors  felt  an  almost  perfect 
certainty  that  it  would  be  punctually  re- 
deemed. 

It  was  by  conduct  thus  uniformly  and 
obstinately  careful  and  honest,  that  the  ap- 
prehensions, which  the  remembrance  ot 
continental  money  had  excited,  were  gra- 
dually soothed,  and  ultimately  extinguish- 
ed. Bank  bills  became  now  an  universal, 
because,  an  unsuspected  and  undoubted 
currency.  And  notwithstanding  the  wars, 
which  for  more  than  twenty  years,  contin- 
ued to  increase  the  value  of  the  precious 
metals  in  Europe,  when  compared  with 
their  various  paper  currencies,  the  specie 
in  this  country  was  never  diminished,  nor 
the  ability  of  the  banks  to  make  good  their 
engagements  in  that  medium,  impaired  or 
suspected : a fact,  which  will  some  what  con- 
fuse the  speculations  of  those  whimsical 
economists,  who  take  it  for  granted,  that 
when  specie  commands  a premium  in  the  de- 
preciated paper  of  one  country,  that  it  must 
necessarily  be  sent  thither  for  profit  from 
that,  which  permits  no  cheaper  medium.  It 
this  were  so,  specie  would  al  w ays  be  plenty, 
where  the  paper  currency  has  depreciated. 
Yet  we  know,  that  at  Washington,  where 
if  is  worth  twenty-five  per  cent  in  paper 
of  that  place  it  is  much  mote  scarce  than  at 
Boston,  where  it  is  of  equal  value  with  bank 
notes.  The  rate  of  exchange  between  dif- 
ferent places,  other  things  equal,  will  al- 
ways be  governed  by  the  degree  of  depre- 
ciation, in  one  of  them. 

In  Europe  specie  was  for  many  years  fluc- 
tuating in  value,  (taking  bank  of  England 
notes  as  a standard  of  value)  from  ten  to 
to  twenty-seven  per  cent;  but  never  was  a 
scarcity  of  specie  felt  in  this  country,  as  a 


6 


consequence,  because  bills  on  that  country, 
during  the  s:.me  period,  also  fluctuated  from 
ten  to  twenty  seven  per  cent,  below  par, 
which  of  course  took  away  all  temptation 
to  ship  it.  On  the  contrary,  every  man 
who  held  a - ank  bill  here,  considered  him- 
self as  holding  specie  to  the  amount  of  it: 
because  he  could  always  obtain  specie  for 
it,  when  engaged  in  an  operation  to  which 
specie  alone  was  competent ; and  this  was 
the  only  sort  of  case  in  which  it  was  ever 
demanded.  So  that  practical  men,  in  this 
state  of  undisturbed  confidence,  began  to 
perceive,  that  so  long  as  this  confidence 
continued,  a bank  really  required  no  more 
specie,  than  it  would  be  called  upon  to  pay  in 
aid  of  those  enterprizes,  in  which  bank 
bills  would  not  answer : and  that  a capital 
almost  entirely  fictitious,  might  go  into 
operation,  as  securely,  and  more  profitably, 
than  one  bottomed  on  actual  and  deposited 
funds. 

The  confidence  which  the  first  bankers 
bad  so  universally  established,  by  exercising 
caution  and  honesty  ; and  the  consequent 
ease  with  which  bank  notes  circulated 
every  where,  excited  a spirit  of  speculation, 
which  boldly  encountering,  overcame  by 
the  force  of  intrigue,  bonussing,  and 
bribing,  obstacles,  apparently  insurmounta- 
ble. The  discipline  of  party  and  t he  remon- 
strances of  leaders,  in  all  things  else  despot- 
ic, w ere  alike  unavailing  in  their  hostility. 
For  now,  in  almost  every  state,  new  banks 
arose,  in  rapid  succession.  But  few7,  if  any, 
these  had  any  other  capital  than  the 
rmtes  of  the  Stockholders,  the  paper  of 
other  banks,  and  the  public  confidence. — 
Thus,  while  the  amount  of  nominal  hank- 
ing capital  was  encreased,  the  solidity  of 
the  old  and  honest  banks  was  gradually  un- 
dermined ; and  ultimately,  there  was  little 
difference,  as  to  substantial  means,  between 
the  old  and  the  new  banks.  What  specie 
there  was,  became  so  scattered,  being  dis- 
persed among  so  many  different  institutions, 
that  actual  means  can  hardly  be  supposed 
to  have  been  now  possessed  by  any. 

Banking  became  henceforth,  a mere  pa- 
per system.  Distended  to  its  utmost  tension, 
more  paper  could  not  be  produced  with 
safety  to  bank  solvency, 
t Banks  having  now  become  for  the  most 
part,  mere  incorporations  of  speculators — 
notoriously  so — with  scarcely  any  founda- 
tion hut  public  confidence,  it  behoved  them 
to  operate  with  Ihe  most  vigilant  wariness 
and  circumspection.  As  they  had  ceased 


to  be  capitalists,  although  they  continued 
to  be  discounters , it  behoved  them  not  to 
go  a step  further,  certainly  not  to  become 
loaners,  especially  for  long  or  indefinite 
periods,  of  their  bank  hills. 

It  has  been  already  remarked  that  the 
public  confidence  enabled  the  banks  to  keep 
afloat  all  their  paper,  except  when,  for  par- 
ticular occasions,  specie  was  wanted  in 
place  of  it.  It  should  be  added  here,  that  a 
very  great  part  of  their  paper  would  neces- 
sarily be  kept  afloat  by  those  who  borrowed 
it  for  purposes  of  business.  But  in  their 
actual  condition,  it  became  essential  to 
their  safety  that  the  paper  they  issued, 
should  be  confined  as  much  as  possible  to 
men  in  business;  for  these  would  keep  it 
suspended  in  circulation , until  it  was  repaid 
to  the  banks  for  debts  due  to  them.  It  be- 
came important  to  their  safety,  that  they 
should  retain  an  uninterrupted  eonlroul  over 
ihe  amount  of  their  issues.  By  discounts,  at 
sixty  days , they  would  always  have  this 
controul;  by  loans  for  years,  they  would 
lose  it,  to  the  amount  <>f  those  loans. 

If,  in  illustration,  we  suppose,  that  a 
bank  discounts  notes,  af  sixty  days,  and 
that  it  discounts  or  issues  every  day  a six- 
tieth part  of  the  total  amount  of  its  dis- 
counts, we  know  that  it  becomes  every  day 
repossessed  of  a sixtieth  part  of  its  issues, 
and  may  when  danger  is  apprehended,  avoid 
it,  by  not  rediscounting  or  issuing  what  has 
been  thus  repaid  to  it. 

It  is  for  this  reason  among  others,  that' 
all  well  regulated  banks  discount  at  short  t 
dates,  instead  of  loaning  at  long  periods : : 

for  in  the  latter  case,  having  parted  w ith  • 
their  bills,  and  having  no  controul  over 
their  debtors,  they  would  have  no  means, 
with  which  to  meet  an  unexpected  call  for 
specie. 

If  a bank  is  sure  to  receive  daily,  as 
much  of  its  paper,  in  payments  as  it  issues 
daily,  by  discounting,  it  is  very  evident  that 
it  issues  no  more  than  is  required  for  circu- 
lation. As  long  as  the  heart  receives  as 
much  blood  as  it  issues,  circulation  is  kept 
up,  and  health  and  vigour  secured  to  the 
system.  But  if  a great  part  of  what  is  is- 
sued, is  let  vuit  by  opening  a vein,  the 
principle  of  circulation  is  destroyed,  and 
the  si'slem  decays. 

So  long  as  hanks  lend  to  those  w ho  must 
pay  them  again;  so  long  as  they  lend  al 
most  exclusively  to  such;  so  long  are  they 
certain  of  having  almost  alt  they  issue  kept 
suspended  in  circulation.  This  is  not  a 


7 


mere  theory  : upon  no  other  principle  can 
it  be  accounted  for,  that  the  banks  were  at 
one  time  able  to  contract  debts  io  ten  times 
the  amount  perhaps  of  the  specie  in  then- 
vaults,  without  being  ever  disturbed. 

How  then  has  it  happened,  trial  they  are 
able  to  do  it  no  longer  ? A correct  answer 
to  this  question,  is  most  important;  because 
it  ascertains  the  cause  of  the  disease,  and 
leaves  the  physician  no  other  task,  than  to 
remove  it,  and  thus  to  restore  the  patient 
to  health. 

The  banks  have  been  obliged  to  stop 
payment,  because  they  loaned  their  bank 
notes,  payable  on  demand,  to  those  who 
were  not  to  repay  these  bank  notes  to  them. 
They  loaned  their  bills,  to  be  repaid  at 
long  or  indefinite  periods ; instead  of  issu- 
ing them  in  consequence  ol  discounts  at 
short  periods,  as  had  always  been  their 
practice*  and  ascertained  to  be  a safe  one 
before.  These  bills,  thus  loaned,  did  not 
return  to  the  banks  in  payment  of  notes 
falling  due  to  the  banks  : the  holders  had  no 
dealings  with  the  banks.  They  returned, 
accompanied  by  a demand  of  speck.  The 
amount,  issued  in  consequence  of  loans  to 
government  was  greater  than  all  the  specie 
in  their  vaults  Added  to  this,  the  public 
confidence,  not  so  much  perhaps  in  the  ulti- 
mate ability , as  in  the  punctuality  of  the 
banks  was  shaken,  as  soon  as  it  was  know  n 
that  they  had  lent  vast  sums  to  (hose,  who 
notonly  were  for  the  present  unable,  but  who 
were  not  even  obliged,  to  pay.  Deposits 
were  now  withdrawn;  specie  was  demand- 
ed, not  only  from  want  of  confidence  in  the 
punctuality  of  the  banks,  but  because  it  be- 
gan to  be  supposed  that  it  would  soon  com- 
mand a premium.  Alarm  on  one  side,  and 
the  love  of  gain  on  the  other,  brought  many 
demands  on  the  banks,  in  addition  to  those 
which  arose  from  notes  loaned  to  govern- 
ment. It  was  impossible  for  the  banks  to 
resist  such  a stream  of  demands;  and  they 
very  prudently  closed  their  vaults. 

The  banks  stopped  payment  indeed : but 
they  were  not  insolvent.  From  that  day 
to  this  they  have  never  been  insolvent. 
They  possessed  more,  much  more,  than  ail 
they  owed;  very  much  more  than  they 
would  be  called  upon  to  pay,  considering 
how  much  of  their  paper  was  constantly  re- 
quired for  circulation. 

They  had  stopped  payment- — what  had 
they  to  pay  their  debts  with  ? They  had 
the  notes  of  individuals  which  had  been 
discounted  by  them;  and  the  public  stock, 


for  which  they  had  issued  their  notes,  hot^j 
left  unpaid,  though  demanded. 

The  banks  were  solvent  then,  fully  and! 
abundantly.  They  had  overruled  ti  e < las- f 
ticity  of  public  confidence,  and  the  capuci-j 
ty  of  the  circulating  world.  They  haddis-j 
covered,  th  t there  was  an  excess  of  their; 
paper — that  there  was  more  than  was  need- 
ed for  actual  use. 

What  then,  became  their  duty  ? Clear-' 
ly,  by  some  system  or  ether  to  produce! 
means  for  absorbing  this  excess. 

It  was  certain  that  the  bills  they  had 
issued  for  the  public  stock  they  took,  could 
not  be  kept  in  circulation.  What  th  n was 
their  duty  ? Clearly,  to  take  back  those 
bills, and  how  could  that  be  done:  by  setting 
their  stock  for  them. 

It  may  be  said,  indeed,  that  the  market 
was  glutted  with  this  stock  duriug  the  war, 
and  that  it  could  not  have  been  sold,  ex- 
cept at  great  loss;  and  hence  it  may  be 
contended,  perhaps,  that  it  could  not  have 
been  reasonably  demanded  of  th  ru  that 
they  should  incur  a loss  merely  becaqse 
they  had  loaned  money  from  patriotic  con- 
siderations, to  the  government. 

This  idea  can  have  weight  only  with 
those,  who  have  persuaded  themselves  to 
believe,  that  banks  were  established  as  pa- 
triotic loan  offices,  and  not  for  commercial 
purposes. 

It  may  also  be  inquired,  in  what  the  pa- 
triotism consisted,  if  there  could  not,  by 
any  possibility,  be  a sacrifice  ? 

These  patriotic  banks  subscribed  for 
stock,  u on  exactly  the  same  terms,  that 
patriotic  individuals,  of  like  sort , did.  W hen 
it  seemed  to  assure  a profit  to  subscribe  at 
par,  they  subscribed  at  par— when  they 
were  able  to  get  stock  at  eighty  eight,  and 
eighty,  for  a hundred,  they  took  it  at 
eightyr-eight  and  eighty.  But  when  they 
were  requested  to  lend,  though  for  the  de- 
fence of  their  own  city,  they  refused  treasu- 
ry notes — all  but  the  Bank  of  America,  but 
were  patriotic  enough,  nevertheless,  to  lend 
on  corporation  bonds.  But  even  on  Bai- 
ted States  stock  their  patriotism  played  a 
secure,  and  always  a profitable  game. 

li  the  interest  should  be  punctually  paid, 
they  were  sure  to  receive  interest  for  more 
than  they  had  advanced.  If  it  shou^l  not 
be  so  paid,  they  had  only  to  slop  payment 
themselves;  a secure  resource  against  he 
worst  that  could  happen. 

But  the  fact  is,  that  the  interest  has  been, 
and  continues  to  ye,  punctually  paid—** 


*r 


usurious  interest.  To  obtain  a right  to 
this  interest,  they  have  issued  bills,  which 
they  Refuse  to  pay.  The  effect  is,  that  on 
their  own  debts,  which  they  do  not  dis- 
charge, they  pay  no  interest;  while  on  the 
stock,  the  holding  of  which  keeps  them  in 
debt,  they  draw  a regular  and  certain  inter- 
est. This  is  unquestionably  turning  pa- 
triotism to  a very  profitable  account ; if  w e 
must  needs  dignify  with  that  appellation,  a 
conduct  which  is  nothing  but  mere  rank 
speculation. 

If  however,  it  should  he  conceded  that 
it  was  but  due  to  their  patriotism,  to  con- 
sent that  they  should  not  lose,  because 
they  had  exercised  this  great  virtue,  with 
so  little  regard  to  their  actual  means : if 
they  are  to  be  excused  for  not  selling  their 
stock,  to  enable  them  to  pay  their  debtsy 
by  what  logic  will  it  be  attempted  to  jus- 
tify loans,  and  the  receipt  of  public  securi- 
ties, bearing  interest,  be  it  remembered , 
subsequently  to  their  bankruptcy,  as  declar- 
ed themselves.  As  honorable  institu- 
tions, guardians  of  public  puctuality,  how 
are  they  to  be  justified  for  tbe  hideous  ex- 
ample they  exhibited  to  the  community, 
when  they  contracted  new  engagements, 
by  which  they  were  to  secure  new  profits, 
at  a time  when  they  were  confessedly  una- 
ble to  make  good  their  old  engagements  ? 

Was  it  patriotism , that  disinterested, 
magnanimous  inspiration,  patriotism  ? If  it 
was  indeed  that,  how  much  is  it  to  be  regrett- 
ed, that  the  making  of  large  gains  should 
have  been  the  consequence.  Full  divi- 
dends, realized  by  bankrupts;  large  profits 
divided  among  stockholders,  who  refuse 
payment  of  their  debts  ; may  be  evidences 
of  modern  patriotism,  but  they  cannot  be 
reconciled  to  old  fashioned  honesty. 

W hether  the  original  bankruptcy  of  the 
banks  was  the  result  of  patriotism,  or  of 
rank  speculation,  is  not  perhaps  a point  so 
important  to  be  ascertained,  as  whether, 
since  their  bankruptcy,  they  have  fairly 
and  honourably  applied  their  means  to  do 
justice  to  their  creditors,  and  thus  to  restore 
the  general  currency  to  value.  If  it  shall 
appear  that  they  have  not : and  especially 
if  it  shall  appear,  that  so  far  from  attempt- 
ing: it,  they  have  plunged  on,  heedless  of 
every  consideration,  hut  that  of  mere  gain, 
increasing  their  issues,  by  receiving  public 
securities,  bearing  interest,  denying  both 
payment  and  interest  to  their  creditors,  and 
ah  this,  after  promises  deliberately  made, 
and  solemnly  reiterated,  whatever  other 

1 


considerations  may  arise,  that  which  re- 
gards them,  will  not,  it  is  presumed,  be  fa- 
vourable. 

The  active  capital  of  the  Banks  in  this 


city,  by  which  ismeant  that  portion  actually 
employed  in  banking,  is  about  thirteen 
millions  and  a half;  and  is  employed  as  fol- 


lows,  by  the 

Mechanics’  Bank 

$2,000,000 

Union 

1,800,000 

Manhattan 

1,850,000 

Merchants’ 

1,490,000 

New- York 

965,000 

Bank  of  America 

3,300,000 

City  Bank 

1,410,000 

Manufacturing  Company, 

700,000 

Total 

$13,515,000 

In  order  to  make  a tolerably  distinct  es- 
timate of  their  profits,  it  is  now  necessary 
to  ascertain  the  amount  of  the  loans  which 
have  been,  in  various  forms,  made  by  them; 
the  consequent  amount  of  paper  which 
they  have  in  circulation,  and  (which  is 
but  the  same  thing)  the  credits  on  their 
books,  for  all  which  they  receive  inter- 
est. These  may  be  safely  stated  at 
twenty-three  millions ; and  from  a cause 
which  shall  be  hereafter  explained,  this  a- 
mount  is  continually  increasing  and  increas- 
ing too,  beyond  all  calculation,  because  the 
banks  themselves  have  no  longer  a controul 
over  it.  Twenty-three  millions : — but  a 
late  advocate  of  the  banks  insists  that  it  is 
only  twenty-two  millions.  Admitting  that 
amount,  for  the  sake  of  expedition,  to  be 
the  correct  one,  it  follows,  that  the  banks 
make  dividends  on  a sum,  which  exceeds 
their  active  capital,  about  eight  millions 
and  a half,  yielding  its  stockholders  about 
half  a million  in  dividends.  This  profit  is 
derived  from  their  mere  credit,  without  any 
cost  or  consideration  whatever.  Of  the  eight 
and  an  half  millions  excess  beyond  their 
capital,  five  millions  have  been  issued  in 
the  purchase  of,  and  in  exchange  for,  go- 
vernment securities,  of  various  sorts,  bear- 
ing interest. 

We  have  been  speaking  hitherto  of  “the 
batiks,”  as  if  no  distinctions  were  to  be 
made  between  them.  It  is  now  time  to 
make  the  proper  discrimination.  Among 
each  other  the  directors  have  already,  in 
their  conversations,  fallen  into  the  familiar 
distinctions  of  tbe  “ debtor  banks  and  the 
“ creditor  banks”  By  the  former  are  meant, 
those,  whose  paper  has  accumulated  in  the 
latter,  to  an  amount,  which  cannot  be  take* 


9 


up.  The  debtor  banks,  the  banks  who  are 
Indebted  to  the  others,  have  become  so  in- 
debted because  they  hold  large  amounts  oi 
public  securities,  bearing  interest,  tor  which 
they  have  issued  their  bank  notes  to  go 
vcrnmcnt,  and  which  notes  have  found  their 
way  into  the  other  banks.  To  keep  the  cre- 
ditor banks  quiet,  however,  and  as  much  as 
possible,  in  good  humour,  it  has  been  stipu- 
lated that  they  shall  charge  interest  on 
these  accumulations.  The  practical  effect 
therefore,  is,  that  the  debtor  banks  make 
their  profit  by  trusting  government  ; and  the 
creditor  banks  make  theirs  by  trusting  the 
debtor  banks.  The  debtor  banks  give  out 
their  notes  in  exchange  for  treasury  notes, 
bearing  interest ; and  the  creditor  banks 
Charge” interest  on  the  notes  they  receive  of 
the  debtor  banks.  But  if  these  notes  accu- 
mulate in  the  hands  of  individuals,  no  in- 
terest is  allowed  them , unless  they  compel 
its  payment  by  law.  And  thus  the  banks 
have  established  a rule  of  justice  towards 
each  other,  in  itself  very  correct,  but  which 
they  refuse,  however,  to  extend  to  toe  rest 
of  the  community.  ^ ? 

It  is  important  to  our  subject,  that  toe 
reader  should  correctly  understand  the 
course  of  the  banks  in  relation  to  treasury 
notes.  We  hope,  therefore,  to  be  pardoned, 
for  what  to  some  may  appear  to  be  unneces- 
sarily minute. 

Some  months  since,  the  secretary  ot 
the  Treasury  proposed  to  all  the  banks  m 
the  U.  S.  that  they  should  receive  treasu- 
ry notes  when  offered  them,  and  give  then 
own  notes  in  Exchange  for  them;  and  also 
that  they  should  receive  their  own  notes 
when  required  and  give  treasury  notes  in 
exchange;  accompanying  this  proposition 
at  the  same  time  by  a threat,  that  Ihe  trea- 
sury should  not  receive  the  paper  of  those 
banks,  which  did  not  receive  treasury 
notes  ! At  a meeting  of  a select  committee 
of  our  banks,  appointed  to  consider  these 
propositions,  it  was  resolved  not  to  agree  to 
them.  Three  of  the  banks,  and  of  course 
they  are  the  three  who  have  been  called, 
because  they  have  become,  the  debtor 
banks , did  afterwards  however,  by  a private 
and  separate  arrangement,  made  by  agents, 
sent  to  Philadelphia  on  purpose,  agree  to 
those  propositions  without  the  consent,  or 
knowledge  of  the  five  other  banks  ; so  that 
these  banks  now  receive  treasury  notes 
from  any  one  who  presents  them,  and  issue 
their  bills  in  exchange  for  them,  when  re- 
quired, And  here  we  submit  to  the  read- 


er whether  it  does  not  follow*  necessarily 
and  inevitably,  that  these  uanks  have  p 
ed  with  all  power  of  control;;  ou.;  . ;eujt 
issues  ? That  department  of  the  ban:  ha? 
been  abandoned  to  the  secretary  of  th 
treasury  ; for  it  is  very  clear,  that  iv  may 
to-morrow,  if  he  pleases,  cause  these  bank 


to  add,  if  he  pleases,  twenty 


si 


millions 

that  excess  of  paper,  which  is  the  trie 
cause  of  depreciation.  That  tins  excess!: 
continually  increasing,  is  most  notorious 
to  what  extent , is  one  of  those  bank  secret 
which  all  their  caution  has  not  prevented 
us  fcom  penetrating. 

Among  others,  this  singular  and  ludi 
crous  consequence  has  followed ; The  U 
States  take  only  the  bills  of  those  banks 
which  cannot  keep  their  accounts  ever 
with  the  other  banks  ; and  refuse  to  ref 
ceive  the  bills  of  those  banks  which  ar« 
immense  creditors  ol  the  banks  whose  hill 
are  received* 

And  the  practical  result  will  be,  that 
long  as  the  notes  of  these  banks  continue  t 
be  deemed  worth  more  than  treasury  notes; 
so  long  will  treasury  notes-eontirme  to  1 
presented  and  bank  notes  issued  in  e: 
change  for  them.  When  these  bank  note 
from  the  quantity  afloat,  become  degrade! 
below  treasury  notes,  this  practice  wil 
cease.  But  the  affairs  of  the  banks  will  b« 
by  that  time,  utterly  irretrievable,  and  they 
will  follow  the  fate  of  all  banks,  whicS 
have  been  the  mere  machines  of  govern 
menf. 

These  explanations  being  essential  U 
a correct  understanding  of  the  whole  sub 
ject,  we  now  recur  to  the  facts  that,  th 
w hole  amount  of  loans  of  all  sorts  made  by 
our  banks,  is  say  $22,000,00( 

Their  active  capital,  13.500,00<j 

Leaving  them  a profit  on  $8,500,00(1 

which  does  not  belong  to  them.  And  that 
at  least  $5,000,000  is  loaned  in  variou 
forms,  to  government,  the  amount  of  whica 
is  continually  increasing. 

If  excessive  issues  are  the  cause  of  deprq 
ciation,  to  retrench  those  issues  would  no 
cessarily  diminish  the  depreciation ; an< 
completely  to  destroy  the  excess , would  hi 
completely  to  destroy  the  depreciation . IT 

the  same  rule  to  increase  the  excess  musi 
be  to  increase  the  depreciation. 

In  part  at  least,  the  existing  excess  hai 
been  occasioned  by  the  issue  of  the  $5,000j 
000  to  government.  It  constitutes  nearl 
twenty  per  cent  of  the  whole  amount  < 


10 


loans.  Why  then  may  it  not  be  contend- 
ed, that  if  the  excess  of  issues  has  produced 
a depreciation  of  fourteen  per  cent , it  should 
follow  that  to  reduce  the  whole  amount  of 
jissues*  twenty  per  cent  would  certainly  put 
Ian  end  to  the  depreciation  ot  fourteen  ? And 
if  so,  does  it  not  follow  that  the  banks  can 
resume  specie  payments,  without  at  ail 
disturbing  the  commercial  world,  if  it 
should  so  please  them  '! 

* They  might  at  least  make  the  attempt. 
But  they  have  never  done  so.  On  the 
contrary,  three  of  them  have  given  up  all 
control  over  the  amount  of  their  issues  to 
the  secretary  of  the  .treasury  ; and  the  rest 
take  the  notes  of  these  banks,  indifferent  to 
the  amount,  because  they  charge  the  mak- 
ers of  them  with  interest ! 

Can  it  be  possible  that  such  a course 
will  eventuate  in  the  resumption  of  specie 
payments  ? Can  it  be  possible  that  those 
who  pursue  it  can  ever  have  for  one  mo- 
ment expected  it  ? Can  it  be  possible  that 
the  community  should  be  longer  deceived? 
We  say  deceived ; for  deceived  they  cer- 
tainly have  been.  We  shall  proceed  to 
detail  by  what  means  and  in  what  manner. 
And  great  indeed  is  our  error  if  we  do  not 
satisfy  this  community  that  the  banks  have 
regarded  their  stipulations  neither  with  the 
community,  nor  the  legislature,  nor  each 
olher. 

Specie  payments  were  suspended  by  the 
banks  in  August,  1814.  Cotemporaneous- 
ly  with  this  event,  they  adopted  resolutions 
to  the  following  effect : 

1.  To  suspend  specie  payments; 

2.  To  continue  to  take  each  others  notes. 

3*  To  keep  an  interest  account,  each 

with  the  others ; and  that  the  debtor  banks 
should  pay  interest  monthly. 

4.  That  no  bank  should  increase  its  loans , 
except  when  bound  to  loan  to  the  state  gov- 
ernment, or  by  general  consent  of  all  the 
banks. 

5.  That  the  debtor  banks  should  reduce 
their  discounts,  whenever  it  should  be  re- 
commended by  the  general  committee. 

The  reader  is  earnestly  requested  to 
bear  in  mind,  as  we  proceed,  that  the  fourth 
resolution  substanvially  covenants  that  the 
then  existing  amount  should  be  the  limit  of 
bank  loans;  and  that  the  fifth,  places  the 
debtor  banks,  in  regard  to  the  reduction  f 
Icao  ,,  unconditionally  under  the  direction 
| of  the  others. 

1 


As  they  stand,  these  resolutions  indicate 
a sagacious  discernment  of  the  temptations 
which  would  beset  the  banks  in  this  new 
course  ; but  above  all,  they  contain  a pre- 
cise acknowledgement  of  the  principles  con- 
tended for  in  this  appeal  : a precise  confes- 
sion, that  their  general  inability  to  pay 
specie  at  that  time,  had  been  produced  by 
the  previous  excesses  of  the  debtor  banks  ; 
and  which  excesses,  we  all  know,  consist- 
ed in  loans  to  government. 

If  then  transgressions  have  been  subse- 
quently committed  by  the  debtor  banks, 
and  tolerated  by  the  others,  they  cannot, 
like  preceding  errors,  be  attributed  to  igno- 
rance or  miscalculations.  From  this  time 
forward,  their  course,  if  wrong,  was  wilfully 
wrong.  For  seven  months  afterwards,  no 
attempt,  of  which  the  public  has  been  ap- 
prised, was  made  to  retrench  the  excessive 
issues.  It  might  be  added,  indeed,  that 
loans  were  made  to  the  city.  But  that  be- 
ing at  a crisis  of  great  danger  is  fairly  ex- 
cusable; and  would  perhaps  have  been 
commendable,  if  credit  had  been  given  to 
the  general  government. 

But  in  February,  1815,  peace  was  re- 
stored. And  we  can  all  easily  enough  re- 
member that  specie  fell  from  fourteen  to 
three  per  cent : so  general  was  the  impres- 
sion that  specie  payments  would  be  resum- 
ed. The  public  expectation  received,  how- 
ever no  nutriment  from  the  banks;  and  the 
public  confidence , seeking  to  be  won,  was 
repelled  without  a single  effort  to  secure 
it.  The  consequence  was,  that  specie  im- 
mediately mounted  again  to  its  original 
elevation. 

This  unexpected,  this  unnecessary,  this 
wilful  perseverance  in  the  non  paying  sys- 
tem, astonishing  to  all,  could  not  fail  to  ar- 
rest the  attention  of  the  legislature.  And 
a bill  was  introduced  into  the  house  of  as- 
sembly, subjecting  bank  notes  to  an  inter- 
est otfcurteCn  per  cent,  per  annum , if  pay- 
ment should  be  refused,  after  the  first  day 
of  January,  1816.  While  this  bill  was 
pending,  the  following  resolutions  were 
transmitted  to  Albany,  and  read  in  the 
house : 

“ At  a meeting  of  the  general  committee  of  the 

hanks  of  the  city  of  New-York,  April  8tb# 

1815. 

“ Resolved  unanimously,  That  the  debtor 
banks  be  required  to  reduce  their  loans  ; and  to 


11 


continue  to  reduce  them,  until  the  balance  due 
the  creditor  banks  shall  be  liquidated. 

“ Resolved  unanimously,  That  the  banks  in 
the  city  of  New-York  pledge  themselves  to  the 
public,  and  10  each  other,  that  they  will  uni- 
formly exert  themselves  to  resume  their  specie 
payments,  and  that  they  will  make  any  reason- 
able sacrifice  to  hasten  this  desirable  event.” 

As  upon  the  former,  so  upon  this  occa- 
sion, all  the  banks  substantially  assent,  and 
the  debtor  banks  specifically  confess,  that 
the  excesses  of  the  debtor  banks  are  the 
cause  of  the  non-payment  of  specie.  And 
the  most  specific  pledges  are  tendered  to 
the  legislature,  not  only  that  in  regard  to 
all  means, there  shall  be  a uniform  exertion  to 
resume  specie  pa\  ments;  and  of  their  deter- 
mination to  make  all  the  requisite  sacrifices , 
but  especially  is  the  cause  of  the  whole  evil , 
the  excesses  the  debtor  bunks  solemnly 
promised  to  be  removed. 

At  the  moment  however,  when  they  were 
announced,  we  could  not  repress  our  dis- 
trust of  the  sincerity  of  these  engagements. 
They  had  been  made  before,  and  disregard- 
ed. But  now,  the  solemnity  of  the  pledge, 
the  occasion  on  which  it  was  made,  the 
body  to  which  it  was  presented,  seemed  all 
to  exclude  the  possibility  that  they  could 
be  afterwards  utterly  disregarded. 

Confident,  however,  as  we  were,  that 
the  sale  of  the  public  securities , held  by  the 
debtor  batiks , as  well  as  some  of  the  others, 
would  more  than  absorb  the  excess,  and  of 
course  correct  the  depreciation— we  could, 
not  without  alarm,  remark,  how  careful !v,  as 
well  as  uniformly,  the  reduction  of  discounts 
w as  suggested, as  an  indispensible  expedient, 
while  their  public  securities,  ample  ami  a- 
bundant,  were  no  more  hinted  at, than  if  they 
had  neither  been  the  cause  of  the  evil,  nor 
eould  be  employed  in  its  correction.  It 
may  not  have  been  designed  to  alarm  the. 
merchants ; but  it  certainly  had  the  effect  ’ 
and  if  it  was  so  designed,  no  want  of  saga- 
city is  displayed.  If  the  merchant  was 
made  to  fear,  that  his  individual  ruin  would 
be  involved  in  the  process  of  the  reform,  it 
could  hardly  be  hoped  that  he  would  become 
its  advocate. 

The  resolutions  of  (he  banks,  accompa- 
nied by  representations  that  legislative  in- 
terposition would  embarrass  measures  al- 
ready adopted,  and  to  be  perseveringly 
pursued,  arrested  the  progress  of  the  bill  ; 
and  the  public  were  left  to  repose  on  the 
assurances  and  fidelity  of  the  banks,  for 
the  attainment  of  the  “desirable”  object. 

After  the  adjournment  of  the  legislature, 


no  measures,  with  which  the  public  are  ac 
quainted,  were  taken,  in  pursuance  of  tin 
above  resolutions. 

Several  banks  in  the  state  of  Connect! 
cut,  which  had  been  more  than  commot 
sufferers,  in  the  general  calamity,  addressee 
the  committee,  in  July  following.  And  sc 
successfully  had  the  reductions  of  discount l 
been  presented  as  an  indispensable  prepara 
live  for  restoring  credit  to  the  paper  of  th 
city,  that  the  Connecticut  banks  point  tc 
that,  as  a principal  measure  to  be  adopted 
and  the  reader  will  not  fail  to  remark,  hov 
carefully  the  sentiment  is  preserved  in  tin 
reply  of  the  committee. 

1 he  reply  also  will  go  far  to  shew  how 

completely  the  penitence,  which  had  be  f 
produced  by  the  terrors  of  April,  had  sub* 
sided  in  the  security  of  July. 

W e give  the  address  and  reply,  at  length. 

“To  [he  Committee  of  the  Banks  in  the  ciN 
of  J\ew-  York.  ' 

“ Gentlemen , 

“ As  a committee  from  the  several  banks  m 
Connecticut,  for  which  we  respectively  sub- 
scribe, we  convened  at  Middletown,  on  the  7th 
instant  to  take  into  consideration  the  present 
embarrassed  state  of  the  paper  currency,  re- 
citing from  the  suspension  of  specie  payment*. 
The  banks  in  the  city  of  New-York,  located  in 
the  principal  seatof  mercantile  operations  vest- 
ed with  large  capitals,  furnishing  i he  great 
mass  of  circulating  medium  in  this  section  of  the 
united  States,  and  under  a direction  deserved- 
ly esteemed  tor  financial  skill,  cannot  fail  to 
perceive  at  once,  the  difficulty  of  chauging,  and 
^n?r<  an®01  P,lrsuing’  fhe  present  system. 

Hie  augmentation  of  the  demand  for  money 
occasioned  by  the  revival  of  commerce,  and  the 
continued  scarcity  of  specie,  have  furnished  mo- 
tives for  prolonging  a course,  at  first  the  result 
of  necessity  alone.  When  specie  payments 
were  first  suspended,  the  community  acquies- 
ced in  the  measure,  under  the  confident  expec- 
tation, that  they  would  be  resumed  on  the  re- 
turn of  of  peace.  A sale  of  the  public  stock 
belonging  to  the  banks,  an  abridgement  of  dis- 
counts, and  consequent  reduction  of  the  quanti- 
ty of  paper  in  circulation,  would,  it  is  believed 
have  enabled  them  to  meet  the  public  expecta- 
tion, by  availing  themselves  of  the  specie  then 
in  the  country.  Under  existing  circumstances, 
when  every  course  is  difficult  and  embarrassing 
it  is  the  part  of  wisdom  to  select  that,  whidi 
will  be  ultimately  least  injurious  to  the  monied 
institutions,  and  to  the  community  at  large  A 
change,  if  necessary,  as  we  have  no  doubt  it  is 
should  be  gradually  eflected,  and  so  as  to  cause 
no  sudden  convulsions  in  the  mercantile  inter- 
est, and  to  enable  individuals  who  depend  on 
banks,  to  suit  their  own  arrangements  to  the 
narrower  limits,  to  which  the  accommodations 
must  be  reduced.  Whether  the  banks  can  po*. 


12 


isibly  persevere  in  emitting  paper,  without  re- 
deeming it,  is  a question  of  moment,  and  we  be- 
lieve of  very  easy  solution.  Tne  proposition 
is  conclusively  settled  by  experience,  that  the 
value  ot  a paper  medium  must  be  proportionate 
to  the  security  on  which  it  rests,  and  the  facility 
with  which  it  is  converted  into  specie.  This 
is  a law  which  no  public  authority,  fina  ;cial  ex 
pedicels  or  mercantile  combinations,  can  mate- 
rially affect.  The  brief  experiment  already 
made  under  the  auspices  of  a patronage  unex- 
ampled, and  almost  universal,  would  ot  itseit, 
evince  that  no  human  skill  or  power  can  alone 
sustain  the  credit  of  a paper  currency.  A great 
depreciation  has  already  taken  place,  and  is  m- 
> creasing  like  the  velocity  of  a falling  body. 
When  the  channels  of  commerce  at  e filled  with 
paper,  specie  is  expelled  from  the  count  y,  and 
the  quantity  of  depreciated  r*aper,  to  supply  the 
demands  of  commerce,  $must  be  inverse!*  as  its 
value.  Hence  it  is  very  evident,  that  if  scarcity  of 
specie  prevents  the  redemption  of  paper,  the 
former  will  be  diminished,  and  the  latter  incal- 
culably increased,  by  the  mere  existence  of  the 
present  system  ; and  of  course,  that  which  is 
already  difficult,  will  soon  become  impossible, 
it  is  now  as  easy  to  foresee,  as  it  will  soon  be 
painful  to  experience,  the  impending  crisis. 
The  great  premium  on  specie,  as  well  as  other 
considerations,  will  prompt  the  creditors  ot  the 
hanks  to  legal  coercion.  Whatever  sound  poli- 
cy might  dictate,  we  believe  it  not  in  the  power 
of  the  state  legislatures,  to  afford  banks  any 
protection  against  suits  at  law.  The  constitu- 
tion of  the  United  States*  has  disabled  them 
from  impairing  the  obligations  ot  contracts  , 
and  the  laws  of  the  union  have  provided  for  re- 
moving to  the  national  courts,  in  the  last  resort, 
all  cases,  which  turn  on  the  construction  of  die 
constitution.  We  cannot,  therefore,  expect  pro- 
tection from  the  state  authorities.  But  were 
we  secure  against  any  attempt  to  enforce  pay- 
ment of  our  bank  notes  by  legal  process,  other 
considerations  sufficiently  prove  the  impolicy  m 
refusing  to  fulfil  our  contracts.  Specie  being 
expelled  from  the  country,  the  paper  of  our 
debtors  will  be  no  better  than  our  own.  rro 

pertv  in  the  shape  of  contracts  will  be  of  node 
terminate  value  : industry  will  be  paralized  , 
morals  corrupted ; banks  dishonored  ; commerce 
greatly  embarrassed  ; and  credit,  both  public 
and  private,  annihilated.  But  with  whatever 
I success , the  system  might  be  pursued  ^ we  think 
that  considerations  of  justice  would  alone  be 
sufficient  to  decide  the  point.  Why  should  di- 
vidends be  made  on  a principal,  which  requires 
no  capital,  and  large  emoluments  received  by 
the  stockholders,  while  their  creditors  are  de- 
nied both  principal  and  interest  ? Bnt  we  for- 
bear  further  to  pursue  a detail  of  considerations, 
already  so  obvious  to  the  enlightened  gentle- 
men, whom  we  have  the  honor  to  ado ress.  We 
trust  that  you  deplore,  equally  with  ourselves, 
||  ^he  evils  which  are  felt  and  anticipated  ; and 
with  no  less  anxiety,  the  general  ruin,  which  we 
are  solicitous  to  prevent.  We  believe  also, 


gentlemen,  that  yon  will  acknowledge  the  vital 
interest  which  our  respective  states  in  general, 
•and  our  monied  institutions  in  particular,  have 
in  the  speedy  adoption  of  some  course,  which 
will  gradually  conduce  to  the  security  and  re- 
demption ol  the  bank  paper  in  circulation. 
But  while  our  mutual  interests,  a sense  of  jus- 
tice, and  a regard  to  the  common  welfare,  com- 
pel us  to  press  this  subject  on  your  considera- 
tion with  great  earnestness,  we  wish  to  be  dis- 
tinctly understood,  not  to  claim  the  immediate 
adoption  of  specie  pa>  ments.  That  would  pro- 
bably be  impossible.  We  do  however  most 
decidedly  declare  our  opinion,  that  the  present 
course,  if  persevered  in,  will  result  in  expensive 
injustice  and  ruin.  If  discounts  are  but  reason- 
ably contracted,  and  the  immense  mass  of  pa- 
per in  circulation  consequently  diminished,  spe- 
cie will  return  to  the  country,  and  supply  its 
place.  The  embarrassment  of  the  merchant, 
if  he  is  previously  notified,  will  be  very  inconsi- 
derable, when  contrasted  with  the  desolating 
calamity,  which  otherwise  awaits  him.  The 
sacrifice  of  profits  by  the  banks  themselves,  can- 
not for  a moment  deter  them  from  the  mea- 
sure, while  those  profits  result,  in  so  great  a 
degree,  from  the  creditor’s  capital,  and  not 
their  own.  If  in  the  mean  time,  no  dividends 
are  made  among  the  stockholders,  until  specie 
payments  shall  be  resumed,  the  preservation  ot 
the  whole  funds  by  the  corporations  will  en- 
hance the  security  to  which  the  creditor  is  just- 
ly entitled.  Under  such  an  arrangement,  the 
ultimate  redemp  tion  of  the  paper,  and  preser- 
vation of  the  entire  funds,  as  a security,  would 
be  attained  ; specie,  gradually  restored  to  the 
country;  the  depreciation  of  the  currency 
checked  ; and  tho^e  public  convulsions,  which 


CdCriitu  9 am*  ^ r . 

are  apprehended  with  dismay,  be  no  longer  an 
object  of  alarm.  We,  therefore,  respectfully 
submit  for  your  consideration,  the  follow  jpg 
proposition,  which,  from  its  very  reasonable 
character,  we  confidently  trust,  will  be  cheei- 
fully  agreed  to:  That  the  banks  respectively 
ado  at  a resolution,  to  be  persevermgiy  adhered 
to,  to  redeem  their  loans  at  the  rate  ot  two  per 
cent  per  month,  until  specie  payments  are  re- 
sumed.” 

Signed , &c. 

REPLY. 

“ The  General  Committee  of  the  banks  in 
New- York,  have  considered  the  communication 
from  the  Convention  of  sundry  banks  in  Connec- 
ticut, with  the  attention  due  to  representations 
from  a source  so  respectable.  The  Committee 
are  fully  sensible  of  the  necessity  of  a vigilant  at- 
tention to  the  amount  of  the  paper  in  circulation , 
and  of  the  importance  of  preventing  any  on- 
due  emission.  BUT,  after  mature  considera- 
tion of  the  subject,  they  are  of  opinion,  that  tile 
reflation  of  it  must  be  left  to  the  banks  ml  fit 
city , unrestrained  by  any  specific  V}e*&€  ® 

subject.  The  banks  in  the  city  of  New- York 
had  already  greatly  reduced  the  usual  amount  ot 
their  loans,  at  the  period  when  a suspension  of 


» 


13 


specie  payments  was  rendered  necessary  by  the 
difficulties  of  Ike  times ; but  deeply  impressed 
with  the  necessity  of  limiting  the  issues  of  a pa- 
per, as  the  only  means  of  preventing  its  deprecia- 
tion, they  entered  into  an  association,  not  to  in- 
crease the  amount  of  the  loans,  then  actually 
made,  except  by  general  consent,  or  in  cases, 
where  banks  were  bound  by  their  charters,  to 
lend  to  the  state. 

“ At  a meeting  of  the  citizens  of  New-York, 
held  on  this  subject,  the  general  committee  of 
the  banks,  gave  a pledge  to  the  public,  to  the 
same  effect  The  course  then  agreed  upon,  has 
been  rigidly  adhered  to ; and  notwithstanding 
loans  to  a large  amount  have  been  required  by 
the  state,  under  the  provisions  of  the  charters, 
of  sundry  banks,  and  heavy  advances  have  been 
made  to  the  corporation  of  the  city,  for  defence 
against  expected  invasion,  as  well  as  to  the 
United  States,  for  the  express  purpose  of  pay- 
ing the  interest  on  the  public  debt,  due  in  this 
city  : objects,  which  the  Committee  are  decid- 
edly of  opinion,  met  the  countenance  and  ap- 
probation of  all  classes  of  their  fellow  citizens 
which  have  altogether  amounted  to  about  three 
millions  of  dollars.  Yet,  the  amount  of  loans, 
made  by  the  banks  collectively,  at  this  time , 
does  not  exceed  the  amount  at  the  period  of  sus- 
pending specie  payments , more  than  three  per 
cent,  on  the  capitals  of  the  banks.  It  results 
from  these  facts,  that  the  commercial  loans  have 
been  diminished  by  nearly  three  millions  of  dol- 
lars. 

The  general  committee,  continue  as  much  as 
ever  impressed  with  the  necessity  of  watching, 
with  the  utmost  solicitude,  the  amount  of  issues , 
and  of  being  ready  to  embrace  any  opportu- 
nity of  safely  resuming  payments  in  specie  ; 
which  alone  in  the  opinion  of  the  general  com- 
mittee can  form  any  effectual  permanent  basis 
for  a paper  circulation.  The  committee  are, 
desirous  still  to  pursue  the  course,  most  condu- 
cive to  the  attainment  of  this  object,  and  to 
make  as  great  and  rapid  a reduction  of  loans,  as 
may  be  found  practicable  with  a due  regard  to 
the  general  state  of  commerce,  and  the  safety 
of  the  banks,  so  much  dependant  on  the  support 
of  commercial  credit. 

“ With  these  views  of  the  subject,  the  gene- 
ral committee  have  invariably  recommended  to 
their  respective  boards  of  directors,  to  pursue 
the  cause  originally  adopted  ; but  they  are  of 
opinion,  that  the  banks  in  the  city  are,  alone, 
competent  to  decide  upon  the  rate  of  reduction  ; 
and  it  is  therefore  unanimously  resolved,  that  it 
is  inexpedient  to  make  any  specific  pledge  on 
the  subject  of  a reduction  of  loans.” 

Signed,  &c. 

^On  the  4th  of  October,  1815,  three  gen- 
tlemen, to  whom  the  general  committee  of 
the  banks  had  referred  a certain  resolution 
of  the  Bank  of  America,  made  a report, 
which  was  sanctioned  by  all  the  city  banks. 
The  reader  will  find  that  this  document  re- 
cognizes all  the  doctrines  for  which  we  con- 


tend. But  he  will  find  too,  that  w hile  it  cOi 
tains  no  allusion  to  the  public  securities  hel 
by  the  banks,  it  assumes,  as  matter  of  cours 
that  the  restoration  of  paper  can  be  effect' 
only  by  a reduction  of  loans : 

REPORT. 

The  committee,  to  whom  was  referred  by  t!r 
general  committee  of  the  banks  in  New-York, 
resolution  of  the  Bank  of  America,  relating 
the  resumption  of  payments  in  specie,  consid 
themselves  called  upon  to  inquire  only  how 
banks  shall  prepare  for  the  resumption  of  tl 
payments  and  when  it  will  be  feasible. 

They  do  not  consider  themselves  called  iipo 
to  discuss  the  question  of  the  expediency  of 
return  to  specie  payments,  knowing  that  th 
public  have  full  right  to  claim  such  return,  an 
that  it  is  the  imperious  duty  of  the  banks  to  prt 
pare,  within  a reasonable  time,  for  the  satisiat 
tion  of  that  claim,  yet  they  cannot  but  expres 
their  firm  conviction,  that  the  interest  of  th 
stockholders  of  the  several  banks,  would  be  es 
sentiaily  promoted,  by  replacing  the  banks 
early  as  possible,  on  a specie  establishment 
In  the  opinion  of  the  committee,  the  prepare 
tion  must  consist  in  a reduction  of  loans , wber 
by  the  demands  upon  the  banks,  will  be  i 
to  bear  a smaller  proportion,  than  at  present 
to  the  amount  of  their  metallic  means,  an 
whereby  also  bank  notes  will  be  rendered  more 
valuable,  and  the  inducement  to  cal!  on  th. 
banks  for  specie  be,  in  consequence,  greatly  di 
minished.  The  time,  when  the  banks  can  re 
sume  their  payments  in  specie,  must  depeni 
upon  the  extent  and  rapidity  of  the  reduction  vj 
loans,  and  also  upon  the  question,  whether  tin 
banks  ofPhiladelphia  and  Baltimore  will  co-op 
erate  in  measures  for  this  purpose.  The  com- 
mittee are  not  informed  that  the  subject  ha< 
received  any  attention  in  Baltimore,  but  they 
are  informed  that  the  banks  in  Philadelphia 
have  appointed  committees  jointly  to  take  ii 
into  consideration.  Should  the  banks  in  eithei 
or  both  those  cities  concur  with  the  banks  o! 
New-York,  a much  smaller  reduction  of  loam 
would  be  required,  than  if  the  banks  of  this  city 
proceed  alone.  The  committee,  therefore,  raus! 
decline  naming  a day  for  the  full  resumption  oi 
specie  payments,  hoping  that  the  concurrence 
of  the  Southern  banks  wili  enable  their  general 
committee,  hereafter  th  name  an  earlier  day 
than  can  now  be  safely  designated.  They  woul 
gladly  propose  a specific  reduction  of  loans  and 
a fixed  time  for  recommencing  payments  in  spe- 
cie— but  under  present  circumstances,  they 
content  themselves  with  proposing  to  the  gene- 
ral committee  the  adoption  of  the  following' 
preamble  and  resolutions,  subject  to  the  appro- 
bation of  their  respective  boards  of  directors. 

Whereas  it  is  deemed  both  just  and  expedient , 
that  the  banks  in  the  city  of  New-York  should 
recur,  as  early  as  practicable,  to  the  payment  of 
specie.  And  whereas  it  is  deemed  essentially 
necessary  to  the  fair  attainment  of  this  object 
that  a large  reduction  of  their  loam  be  made , 


14 


jind  so  made,  as  to  be  duly  apportioned  to  the 
Relative  situation  of  the  several  banks  of  the 
'city  ; a:  d whereas  also,  it  is  considered  highly 
[Important  to  btain  the  concurrence  of  the 
Shanks  of  Philadelphia  and  Baltimore. 

Therefore,  resolved,  that  the  banks  in  the 
|>ity  of  New-York,  will  so  far  reduce  the  amount 
of  their  loans , a*  may  be  necessary  to  enable 
them  to  resume  their  payments  in  specie. 

Resolved,  that  no  bank  in  the  city  of  New 
York,  shall  in  the  aggregate,  be  in  debt  to  the 
'other  banks  on,  or  after  the  first  of  January 
next,  more  than  $400,000— nor  on  or  after  the 
first  of  March  next,  more  than  $250,000—  nor 
on  or  after  the  first  of  May  next  more  than 
$100,000— and  that  on  the  first  of  July  next,  or 
as  much  earlier  as  the  banks  may  resume  their 
specie  payments,  the  debt  , then  existing  be- 
tween them,  shall  be  liquidated  in  specie  to  the 
amount  of  the  balance,  which  each  debtor  bank 
may  owe  in  the  aggregate. 

Resolved,  that  the  copy  of  the  proceeding 
preamble  and  resolutions,  be  transmitted  to  the 
chairman  of  the  joint  committees,  of  the  banks 
of  Philadelphia,  and  to  any  committee  repre- 
senting the  banks  of  Baltimore,  requesting  their 
concurrence  in  the  adoption  of  measures,  for 
the  requisite  and  fair  reduction  of  loans,  and  in- 
.viting  them  to  name,  jointly,  with  the  banks  of 
New-York,  a day,  beyond  which,  the  payment 
©f  specie  shall  not  be  suspended. 

New-York,  4th  Oct.  1325. 

Signed, 

LYNDE  CATLIN. 

D.  I GREENF. 

GEO.  NEWBOLD. 

A cartful  perusal  of  what  has  been  said, 
and  of  the  different  documents  now  laid 
before  the  public,  will  establish,  and  we 
trust,  have  satisfied  every  reader, 

That  the  “ diseased  condition”  of  the 
paper  currency  is  a deplorable  evil ; 

That  it  lias  been  occasioned  by  excessive 
issues  of  bank  notes ; 

That  these  excessive  issues  have  been 
the  consequence,  not  of  discounts  to  mer- 
chants, but  of  loans  to  government;  and 
therefore, 

That  it  is  in  the  power  of  the  banks  to 
retrench  the  excesses ; simply  by  undoing 
that  which  has  been  injudiciously  done; 
and  that  they  will  thereby  render  them- 
selves able  to  resume  specie  payments. 

That  inasmuch  as  the  exchanging  of  bank 
notes,  for  public  securities,  produced  an  ex- 
cess of  bank  notes : so,  to  exchange  public 
securities  for  bank  notes,  "will  draw  in,  and 
destroy  the  excess. 

But  it  has  been  advanced  in  behalf  of 
these  banks,  that  the  sale  of  their  public  se- 
curities would  involve  them  in  great  loss . This 
might  he  satisfactorily  enough  answered, 


by  saying,  that  they  continue  to  receive 
these  public  securities  ; and  therefore,  that 
the  directors  of  the  banks  do  not  under- 
stand the  value  of  them,  in  which  case, 
they  ought,  for  the  good  of  all  parties,  to  be 
stopped  from  receiving  more  of  them;  or, 
that  they  are  good  and  substantial  proper- 
ty, in  which  case,  they  may  be  disposed  of, 
at  the  same  they  cost,  at  least. 

But  further,  it  may  be  remarked,  that  the 
restoration  of  our  national  credit  has  ren- 
dered this  stock  one  of  the  most  eligible 
investments  of  money-capital  in  England, 
and  the  only  reason  why  it  does  not  now 
command  a premium  in  that  country,  is 
the  depreciation  of  the  currency  of  this. 
The  holder  there  is  obliged  to  receive  his 
interest  in  the  United  States,  and  sustain  a 
loss  proportioned  to  the  depression  of  our 
medium.  But  this  difficulty  is  obviated  by 
the  very  operation  itself.  The  offers  for 
sale  might  be  accompanied  with  a guaran- 
tee, that  the  interest  should  be  paid  in  that 
country,  or  in  an  undepreciated  currency  in 
this.  Iff  however,  due  allowance  is  made 
for  its  original  cost,  the  revenue  it  has  al- 
ready yielded,  and  the  advantage  deiived 
from  paper  emissions,  for  which  nothing  has 
yet  been  given  in  return,  it  is  hardly  pos- 
sible but  that  the  whole  transaction  should 
yield  a profit  to  the  banks  in  its  direct  re- 
sult, in  addition  to  the  important  objects 
which  the  sale  would  promote. 

It  has  been  said,  however,  that  the  ba- 
lance of  trade  is  against  the  United  States 
and  that  to  resume  payments,  will  certain- 
ly send  specie  out  of  the  country.  .At  the 
time  we  are  writing,  dollars,  which  in  Eng- 
land are  not  legal  tender,  are  about  four  per 
cent  below  par.  And  at  the  time,  when  a 
very  indecent  and  scurrilous  attack  was 
made  in  the  National  Advocate,  upon  one 
of  the  creditors  of  the  banks ; they  were 
but  four,  although  that  writer  stated  them 
to  be  twelve  per  cent  above  par ; and  con- 
tended that,  in  case  the  banks  paid  specie, 
remittances  might  be  made  to  England 
twenty-three  per  cent  cheaper  than  in  bills 
of  exchange.  The  fact  is,  that  at  that  verv 
time,  dollars  were  at  4-8  in  England,  their 
standard  value  being  4-6  ; and  bills  of  ex- 
change on  England  could  be  purchased  at 
five  per  cent  below  par,  for  specie,  in  New- 
York.  From  these  facts  it  follows,  that 
one  hundred  dollars  would  buy  164  of  bank 
of  England  paper,  in  England.  But  the 
freight,  insurance  and.  commissions,  wouli 


15 


be  at  least  Jive  per  cent,  so  that  they  would 
actually  nett,  in  England,  99  dollars.  At 
that  very  time,  100  dollars  in  specie  would 
purchase  here,  a bill  on  England,  payable 
in  English  bank  bills,  for  105  dollars,  which, 
with  the  reduction  of  one  per  cent  for  GO 
days  discount  after  sight,  leaves  104  dol- 
lars ; exactly  Jive  dollars  more  than  a ship- 
ment of  specie  would  have  produced  ! 

At  this  moment,  however,  dollars  are 
below  par  in  England;  and  we  presume, 
that  there  can  now  be  no  conceivable  temp- 
tation to  ship  them  to  that  country. 

Having  showed,  that  upon  a restoration 
of  the  currency,  stock  might  be  sold  at  a 
profit  in  England  ; and,  that  there  is  no  dan- 
ger of  our  dollars  being  drawn  thither,  we 
return  to  the  conduct  of  the  banks. 

When  they  stopped  payment,  the  banks 
made  a pledge,  which  produced  a general 
confidence,  that  they  would  then  retrench. 

When  the  legislature  seemed  disposed 
to  charge  them  with  double  interest,  be- 
cause they  were  making  double  profits,  they 
again  promised  to  retrench.  So  far  from 
disguising  the  fact,  they  uniformly  confess, 
what  is  in  itself  palpable,  that  retrench 
ment  is  the  only  cure  for  the  disease. 

But  how  shall  this  be  brought  about  ? 
The  banks  uniformly  insist  that  it  must  be 
by  a reduction  of  loans. 

We  insist,  on  the  contrary,  that  we  have 
demonstrated,  that  it  can  and  ought  to  be 
done,  by  a sale  of  their  stock ; and  not  by 
retrenching  their  loans  to  individuals.  The 
first  will  merely  lessen  the  amount  of  divi- 
dends : the  latter  would  unnecessarily  and 
unwarrantably  embarrass  the  merchants. 

It  appears,  from  the  reply  to  the  Connec- 
ticut banks,  that  in  July,  the  commercial 
loans  had  already  been  reduced  nearly  three 
millions , below  what  their  amount  was, 
when  pajrments  were  suspended.  But  it  is 
at  the  same  time  acknowleded,  that  the 
whole  amount  of  loans  had  been  increased 
three  per  cent,  on  the  capitals  of  the  hanks ; 
and  this  before  the  system  of  receiving 
treasury  notes  was  adopted.  The  effect  of 
that  system,  as  we  have  been  recently  en- 
abled to  ascertain,  has  been  to  produce  in 
the  creditor  banks,  an  accumulation  of  the 
notes  of  the  debtor,  banks  of  between  two 
and  three  millions:  although  the  balances, 
when  payments  were  suspended,  were  less 
than  three  hundred  thousand. 

To  what  end  then,  are  commercial  loans 
reduced,  if  the  whole  amount  of  issues  is 
regularly  increased  ? As  to  the  debtor 


banks  what  reliance  can  be  placed  upon 
their  engagements  to  the  public  if  so  far 
from  endeavoring  to  fulfil  them,  they  have 
put  it  utterly  out  of  their  power  to  do  so  ? 
And  as  to  the  creditor  banks,  what  reliance 
can  be  placed  upon  their  pledges,  if  they 
indulge  their  debtors  in  these  dreadful  ex- 
cesses, to  participate  in  the  profits  Z. 

The  different  documents  we  have  laid 
before  the  reader  uniformly  admit,  that  the 
liquidation  of  the  balances  due  to  the 
creditor  banks  must  necessarily  precede  the 
resumption  of  specie  payments.  And  as 
uniformly  is  the  hope  encouraged  that  they 
shall  be  liquidated:  but  the  practice  has 
been  no  less  invariable,  advisedly  and 
inimitably  to  increase  them. 

The  resolutions  of  August,  1814,  recon- 
ciled us  to  the  suspension  of  payments. 

Those  of  April,  1815,  prevented  legisla- 
tive interference. 

Those  of  October  promise  as  fairly,  but 
how  can  we  confide  in  them  ? 

The  promises  of  August,  1814,  and  of 
April,  1815,  it  was  in  the  power  of  the 
banks  to  perform.  But  they  were  disre- 
garded. 

Those  of  October  cannot  be  performed, 
so  long  as  bank  notes  are  exchanged  for 
treasury  notes.  How  then  can  we  rely 
upon  them  ? 

On  one  side  the  most  solemn  engage- 
ments are  made,  violated, and  renewed  with 
the  public.  On  the  other,  engagement* 
are  made  with  the  secretary  of  the  trea- 
sury, performance  of  which  renders  per- 
formance of  the  others  impossible.  To 
demand  confidence  under  such  circumstan- 
ces would  he  as  preposterous,  as  it  would 
he  ridiculous  to  yield  it.  So  long  as  Mr. 
Dallas  can  pump  up  their  notes  at  pleasure, 
so  long  will  it  be  in  vain  to  hope  a correc- 
tion of --that  excess  of  paper,  which  is  the 
cause  oif  its  depreciation . 

In  the  mean  time,  honest  and  merito- 
rious creditors  can  receive  neither  payment 
nor  interest,  from  those  who  riot  in  the  full 
delights  of  nine  per  cent  dividends  ! and 
whose  dividends  will  increase  exactly  in 
proportion  as  their  paper  becomes  worth- 
less ! For  it  is  as  ludicrous,  as  it  is  lament- 
able, that  while  their  notes  are  twelve  per 
cent  below  par , their  stock  is  from  fifteen 
to  thirty  per  cent  above  par.  The  more 
paper  the  more  depreciation,  it  is  true 
but  the  more  profit,  also. 

If  the  community  are  disposed  to  indulge 
them,  in  this  course,  they  will  hardly  feel 


16 


'j  a motive  to  abandon  it.  A sense  of  justice 
[i  might  prompt  to  it ; but  as  corporations 
i have  no  souls,  they  can  commit  no  crimes. 
I Is  there  then  a hope  that  the  banks  will  rc- 
| same  specie1  payments  witkoat  being  compel- 
led? Unreservedly  and  unhesitatingly,  we 
answer,  no!  We  have  proved  them  to  have 
, been  unwilling  at  the  outset;  and  by  the 
arrangements  with  the  treasury,  unable ; at 
the  conclusion. 

i The  evils  attendant  on  such  a state  of 
1 filings  have  been  so  uniformly  confessed 
hy  the  banks  themselves,  that  it  seems  al- 
!'  most  unnecessary  to  speak  of  them  further. 
We  hope,  however,  for  the  readers  patience, 
while  we  particularize  a few  of  them. 

The  rise  in  prices  has  been  commensu- 
rate with  the  depreciation  of  paper,  in  al- 
most all  cases ; in  many,  far  beyond  it.  All 
those,  whose  revenues  are  fixed  by  law,  by 
contract,  or  custom,  sustain  a loss  on  their 
incomes,  equal  to  the  rise  in  prices.  The 
expenses  of  living  have  been  increased  at 
least  twenty-five  per  cent;  and  just  as  great 
as  this  increase  is,  the  actual  value  of  fixt 
incomes  and  earnings  is  diminished. 

The  operations  of  the  treasury  are  de- 
ranged by  the  general  evil,  and  in  various 
forms,  inevitable  injustice  is  done,  both  to 
ffie  debtors  and  the  creditors  of  government. 
Equality  of  taxation  cannot  be  preserved, 
while  in  one  section  of  the  country  public 
revenues  must  be  paid  in  a currency  more 
J valuable  than  is  received  in  another.  The 
| very  faith  of  the  nation  is  violated,  when 
teuenuesy  pledged  for  the  redemption  of  the 
public  debt,  are  collected  in  a currency  be- 
low the  standard  of  gold  and  silver;  for  the 
pledge  is  thereby  annihilated,  and  the  notes 
of  government,  or  some  other  mere  credit, 
substituted  in  its  place. 

In  addition  to  this  we  have  seen,  in  the 
official  communications  of  the  secretary  of 
the  treasury,  many  of  the  extreme  embar- 
rassments of  that  department,  both  in  the 
collection  and  disbursement  of  the  public 
treasures.  Loud  have  been  the  complaints 
of  government,  and  severe  the  losses  and 
sufferings  of  our  citizens. 

The  reputation  of  bank  paper  is  drawing 
j to  a crisis.  The  hope  of  specie  payment 
f being  ever  resumed,  is  almost  extinguished. 
When  that  hope  shall  be  entirely  extin- 
guished, those  who  are  acquainted  with 
what  constitutes  the  value  of  money , will 
calculate  the  worth  of  a currency,  which  is 
neither  property,  nor  evidence  of  property  ; 
and  of  which  no  use  can  be  made,  but  to 


pay  debts  due  to  banks,  but  which  all  other 
creditors  may  refuse:  A currency,  there- 
fore, valuable  only  to  debtors,  and  that  only 
in  certain  cases  ; but  utterly  useless  to  cap- 
italists. 

To  the  merchant,  while  he  lias  no  capi- 
tal, such  a currency  may  be  as  good  as  any 
other.  But  when  his  profits  should  make 
him  a capitalist,  he  cannot  realize  them. 

The  balance  of  trade  is  nowr  between 
twelve  and  twenty  millions  in  favour  of 
this  city.  If  specie  payments  were  to  be 
resumed,  that  balance  would  have  to  be 
paid  in  specie,  or  in  paper  estimated  at 
specie  value.  This  would  more  than  coun- 
terbalance any  inconvenience  resulting 
from  a diminution  of  the  amount  of  curren= 
cy,  and  would  enable  the  banks  to  go  on 
with  liberality,  and  in  security. 

We  hope  to  be  pardoned  if  we  now  de- 
clare our  absolute  conviction,  that  we  have 
fully  established, 

1.  That  the  banks  ought  to  pay. 

2.  That  they  can  pay. 

3.  That  they  will  not  pay.  And  we 
trust,  in  conclusion,  that  every  reader 
will  agree 

4.  That  they  ought  to  be  made  to  pay. 

To  those  who  assent  to  these  positions, 

it  will  be  evident,  that  every  fair  act  of  co- 
ercion is  laudable,  and  entitled  to  applause 
and  support.  And  every  man  who  shall 
lend  his  aid  in  it,  is  entitled  to  be  considered 
a public  benefactor. 

Having  discussed  some  of  the  general 
points  in  relation  to  the  banking  system  of 
the  present  day,  and  exhibited  the  conduct 
of  the  banks,  towards  the  public  at  large, 
wre  hope  to  merit  their  approbation  by  pla- 
cing before  them  the  history  of  a particular 
transaction,  not  merely  because  it  will  be 
found  ia  itself  interesting,  but  to  repel  the 
basest  of  all  calumnies ; as  false,  as  they  are 
unprovoked;  as  malicious,  as  the  subject 
of  them  has  been  unoffending  and  merito- 
rious. 

Those  who  want,  and  who  therefore 
borrow  money,  bring  profit  to  a bank.  Those 
who  are  worth  money,  themselves,  and  who 
receive  bank  notes  as  money,  are  they  who 
give  character  and  credit  to  the  bank  notes. 
If  enough  borrowers  do  not  apply,  lean 
dividends  are  the  consequence.  If  actual 
capitalists  will  not  take  bank  notes,  depre- 
ciation follows.  The  first  affects  the  inter- 
ests of  the  bank ; the  latter  is  a public  injury. 

Although  we  are  much  in  the  habit  of 
considering  banks  as  distributors  oi favors y 


17 


yet  we  should  not  forget  that  they  have 
also  duties  to  perform.  And  although  it 
is  most  commendable  to  be  generous,  it  is 
of  primary  obligation  to  he  just.  To  be. 
generous  at  the  expense  of  others,  to  grant  j 
favours  to  many , while  you  deny  justice  to 
all,  argues  but  little  moral  refinement.  But 
to  deny  justice,  wautonly,  obstinately,  per- 
severingly,  when  it  -would  be  as  easy  to 
render,  as  to  deny  it,  is  a conduct,  which 
the  public  w ill  find  amply  detailed  in  the 
following  narrative.  And  after  its  perusal, 
the  reader  will  be  at  no  loss  to  determine 
how  unfounded  the  aspersons  are  which 
have  been  cast  upon  the  motives  and  con- 
duct of  Mr.  Bronson,  for  having  endeav- 
oured to  obtain  mere  justice  at  their  hands, 
by  a legal  prosecution,  after  all  other  means 
had  been  exhausted  : and  when  all  possible 
hope  of  a voluntary  performance  of  their  en- 
gagements, had,  as  we  have  shewm,  been 
utterly  dissipated. 

We  have  been  at  some  pains  to  obtain  a 
correct  knowledge  of  the  circumstances, 
because  they  give  a practical  view  of  the 
effects  upon  individuals,  of  a rigorous  non 
paying  system  by  the  banks.  And  we  think 
we  may  venture  to  assure  our  reader,  that 
every  fact  set  forth,  is  susceptible  of  direct 
proof. 

During  the  prosperity  of  our  mo- 
nied institutions,  several  country  banks, 
that  they  might  render  their  paper  a better 
medium,  by  enlarging  the  sphere  of  its  cir- 
culation, deposited  funds  for  its  redemption 
in  the  city  of  New- York.  This  was  mu- 
tually beneficial.  While  on  the  one  hand, 
the  currency  thus  redeemable  was  melio 
rated ; the  city  banks,  on  the  other,  enjoy- 
ed the  benefit  of  loaning  such  portion  of 
these  deposits  as  the  nature  of  the  arrange- 
ment might  admit.  Some  years  previous 
to  the  late  war,  an  agreement  was  made, 
and  went  into  operation,  between  the 
Bridgeport  and  the  Mechanics'  Bank,  that 
the  former  should  make  a specific  deposit 
with  the  latter,  the  full  amount  of  which 
should  be  maintained  during  the  existence 
of  the  arrangement — that  the  latter  should 
redeem  the  Bridgeport  bills  made  paj^able 
there  by  special  contract,  whenever  they 
should  be,  from  time  to  time,  presented; 
and  that  all  the  monies  thus  advanced  by 
the  Mechanics’  Bank,  should  be  weekly  re- 
imbursed, without  impairing  the  deposit,  by 
an  agent  of  the  Bridgeport  Bank  in  the  city 
of  New-York.  At  the  commencement  of 
the  war,  the  insecure  situation  of  the  bank- 


! ing  house  at  Bridgeport,  on  a defenceless 
harbour ; induced  the  directors  to  transfer 
! the  entire  funds  of  the  corporation  to  the 
| city  of  New-York,  where  they  were  all  ac- 
j cordingly  deposited  with  their  agent,  or 
held  in  the  paper  of  the  various  banks. — • 
These  funds  were  about  equal  £o  all  their 
bills  in  circulation,  and  destined  to  redeem 
them.  In  this  condition  the  greatest  part 
remained  until  the  suspension  of  their  pay- 
ments. The  bank  of  Bridgeport  was  then 
exposed,  with  very  limited  means  in  its 
possession,  to  the  demands  of  its  creditors, 
i now  made  eager  by  the  shock,  which  all 
bank  credit  had  sustained  from  the  newly 
adopted  measure.  Disposed,  as  far  as  pos- 
sible, to  do  perfect  justice,  the  directors  or- 
dered the  cashier  to  allow  interest  on  all 
demands  made  upon  the  bank — to  confess 
judgment,  without  process,  whenever  re- 
quired— to  desist  from  all  loans  and  reissues 
of  paper- — to  cal!  on  debtors  for  a fair  ex- 
ertion cf  their  ability  to  pay,  and  to  ex- 
change, for  their  own  bills,  the  paper  of  the 
city  banks  at  a reasonable  discount.  Thus 
every  effort  was  made  to  do  justice  to  their 
creditors,  and  no  suit  was  in  any  instance 
commenced  against  the  debtors  of  the  bank. 
Meanwhile  the  bills  of  the  Bridgeport  bank 
which  were  received  in  the  course  of  busi- 
ness, by  banks  wdiose  paper  it  held,  were  by 
some  means  withdrawn  from  those  banks, 
and  specie  demanded  therefor.  And  w hat  is 
still  more  oppressive,  its  funds  in  the  Me- 
chanics’ Bank,  and  bank  notes,  at  their 
specie  value,  are  continually  applied  to  the 
redemption  of  its  bills,  and  the  loss  (which 
is  the  difference  between  specie  and  paper) 
is  borne  by  the  Bridgeport  Bank.  Let  us 
pause  a moment,  and  examine  the  charac- 
ter of  this  proceeding. 

We  ought  never  to  forget,  that  the  same 
rules  cf  justice  which  govern  the  inter- 
course of  individuals,  are  applicable  to  ci- 
vil corporations.  Although  questions  of 
general  policy  may  sometime  arise,  w hich 
render  doubtful  the  expediency  of  a strict 
fulfilment  of  contracts  by  a monied  corpo- 
ration, even  where  its  own  interests  might 
not  be  essentially  endangered,  yet  the  con- 
siderations on  which  such  doubts  are  ex- 
cited, do  not  involve  the  present  point  of 
enquiry.  The  scarcity  of  specie,  or  the 
liberality  of  mercantile  loans,  cannot  af- 
fect the  question,  or  be  affected  by  its  re- 
sult. After  certain  given  acts  (as  the  re- 
demption of  these  bills)  are  performed,  and 
have  yielded  all  the  consequence  which 


18 


I they  have  a tendency  to  produce,  the  ac- 
count between  the  parties  remains  to  be 
adjusted,  and  in  the  settlement  of  that,  the 
most  entire  justice  may  be  observed,  with- 
out varying  the  state  of  atTairs  which  the 
question  of  policy  exclusively  regards.  In 
j testing  the  above  transaction,  then,  the 
I principles  of  justice  are  alone  to  be  con- 
sidered. 

It  would  seem  a plain  proposition,  that 
| the  Bridgeport  Bank  was  entitled  to  as 
good  money  as  it  gave,  and  was  no t justly 
; compelabie  to  allow  more  for  paper  than  it 
was  worth.  If  one  has  taken  paper  under 
par , he  sustains  no  loss  by  its  redemption 
at  the  same  rate  ; but  it  1 have  given  my 
: correspondent  Cash  to  redeem  my  notes, 
shall  he,  on  losing  his  credit,  take  (hem  up 
with  his  own  at  the  rate  of  two  for  one,  and 
charge  me  with  the  difference  ? He  might 
as  well  have  done  nothing,  for  my  debt  is 
not  diminished  a cent  by  the  operation  ; 
nay,  better,  for  lie  lias  virtually  embezzled 
my  funds.  He  compels  me  to  re-advance 
what  was  already  paid.  Now  what  is  in 
this  cage  true  of  one  hundred  per  cent,  is 
equally  true  of  ten,  where  that  is  the  real 
difference.  This  question,  we  think,  is  sa- 
tisfactorily resolved  ; and  ifit  is,  the  Bridge- 
port Bank  has  suffered,  and  is  daily  suffer- 
ing, the  most  obvious  injustice.  Is  not  the 
•?  truth  too  clear  to  be  resisted  by  the  most 
inveterate  prejudice,  that  if  A agrees  to  pay' 
one  hundred  dollars  for  me,  and  does  pay 
it  in  depreciated  paper,  he  has  paid  one 
hundred  dollars  only  ? Have  I more  than 
one  hundred  to  pay  him  in  return  ? If  I have 
previously  paid  that  in  specie,  or  in  his 
ow  n notes  of  equal  value,  which  I received  j 
as  specie,  are  we  not  equal  in  the  scale  of 
justice  ? Shall  I,  in  addition  to  the  one  hun- 
| dred  dollars  which  I have  paid,  and  which 
is  equal  to  the  debt  to  which  it  was  to  be 
appropriated,  be  further  compelled  to  pay 
him  for  a loss  of  his  own  credit,  however  in- 
evitable, to  which  I was  in  ho  degree  ac- 
, cessary  ? 

To  return  to  the  narrative  : the  great 
amount  of  Bridgeport  notes  in  circulation, 
and  the  depreciation  of  the  paper  of  the 
j city  received  at  par  and  paid  away  at  a dis- 
count to  redeem  its  bills,  subjected  the 
! Bridgeport  Bank  to  constant  and  heavy  sa- 
crifices. Neither  public  opinion  nor  judi- 
cial favour  afforded  any  protection.  The 
legislature,  by  a public  act,  compelled  the 
banks  in  Connecticut  to  confess  judgment, 
at  their  own  expense,  on  all  bills  under  100 


dollars  or  submit  to  the  costs  of  prosecu- 
tion, and  to  pay  nine  per  cent  interest  on  all 
executions  after  sixty  days,  if  not  previous- 
ly levied  by  the  creditor. 

Thus  bereft  of  means  and  reduced  to  ex- 
tremity, the  condition  of  this  faithful  but 
unfortunate  institution,  was,  in  February 
last,  represented  to  the  general  committee 
of  the  city  banks  in  the  following  letter. 

New-York,  February  10th,  1315. 

Chas.  Wilkes , Esq. 

SIR, 

It  will  be  seen  by  the  law  lately  passed  by 
the  legislature  of  Connecticut,  that  every  bill 
issued  by  the  banks  in  that  state  under  $100, 
if  not  paid  in  specie  on  demand,  can,  at  the  ex- 
pense of  the  bank,  be  changed  into  a judgment 
and  an  execution,  and  put  on  interest  at  9 per 
cent,  and  the  payment  enforced  at  the  pleasure 
of  the  holder.  This  oppressive  act  is  aimed  at, 
and  bears  principally,  if  not  entirely  on  the 
Bridgeport  Bank,  it  being,  as  is  believed,  the 
only  one  in  the  state  which  can  materially  suffer 
by  it. 

It  is  situated  in  the  centre  of  a populous  dis- 
trict connected  wholly  with  the  New-York  mar- 
ket, in  which  district  there  is  probably  6 or 
$700,000  of  the  paper  of  the  New-York  banks  in 
circulation,  being  now  the  only  medium  in  use  ; 
which  owing  to  its  always  having  been  received 
without  discount  at  the  bank  there,  passes  at 
par  by  common  consent,  the  same  as  in  the  city 
of  New-York.  The  bills  of  Bridgeport  Bank 
being  all  under  $100,  subject  it  to  the  expense 
of  a judgment  and  execution  on  each  one,  which 
together  with  the  9 per  cent  interest,  all  paya- 
ble in  specie,  is  sufficient  at  the  present  time  to 
ruin  the  institution.  To  refuse  taking  New- 
York  bills  of  our  debtors  in  that  state  and  this, 
or  to  demand  the  difference  between  those  bills 
and  specie,  would  create  in  the  country  as  well 
as  in  the  city,  a corresponding  claim  on  the 
banks  here  that  issue  them,  and  possibly  give 
rise  to  a state  of  things  that  might  derange  the 
whole  system  of  business.  No  one  can  be  more 
solicitous  than  I am  to  avoid  such  an  evil,  and 
.great  sacrifices  have  been  made  already  with 
that  view;  but,  since  we  are  all  on  a footing  as 
to  the  legal  obligation  to  pay  in  specie,  it  seems 
rather  unreasonable  that  one  institution  should 
be  sacrificed  to  ward  off  the  evil  Irom  all  the 
rest;  especially  if  a remedy  can  be  found,  not 
incompatible  with  the  general  interest. 

Our  unredeemed  circulation  is  about  150,009 
dollars  ; with  our  own  means  we  can  master 
80  of  that,  with  70,000  dollars  in  specie  more 
than  we  have,  we  can  redeem  our  outstanding 
paper,  which  will  enable  us  to  receive  in  pay- 
ment the  bills  of  the  New-York  banks  as  usual. 
Our  debtors  then  will  have  no  pretext  for  de- 
manding specie  of  your  banks  to  enable  them 
to  make  payment  to  purs  ; and  the  paper  ot 
the  former  w ill  continue  to  be  current  through 
a large  and  populous  district,  over  which  our 
debtors  are  scattered. 


19 


The  banks,  being  thus  situated,  there  seems 
to  be  no  alternative  but  for  the  directors  of  the 
Bridgeport  Bank  to  submit  to  a sacrifice  of  its 
capital,  or  to  adopt  a system  ot  collection 
which  in  its  consequences  may  seriously  injure 
the  banks  in  this  city,  unless  they  can  on  some 
terms  obtain  a loan  of  specie.  If  the  gentlemen 
composing  the  general  committee,  in  considera- 
tion of  the  peculiar  situation  of  the  respective 
banks,  can  find  it  expedient  and  compatible 
with  the  interest  of  the  banks  to  advance  on 
loan  to  Bridgeport  Bank  70.000  dollars  in  spe- 
cie, the  most  perfect  and  ample  security  shall 
be  given  to  the  satisfaction  of  the  committee  for 
the  return  of  the  specie  with  an  interest  of  six 
per  cent  whenever  the  banks  in  the  city  shall 
resume  their  specie  payments;  and  the  com- 
mittee may  designate  the  person  with  whom  it 
shall  be  placed,  so  that  it  be  subject  to  redeem 
the  bills  of  the  bank  as  they  shall  be  demanded, 
to  be  all  paid  out  in  the  city  ; and  the  transac- 
tion shall  be  strictly  and  entirely  confidential  ; 
trusting  that  this  communication  will  be  so 
considered  whether  approved  or  not;  as  the 
disclosure  of  its  contents,  if  the  proposition  is 
rejected,  might  subject  the  bank  to  inconve- 
nience. 

By  the  terras  proposed  it  will  be  perceived 
that  when  the  specie  can  be  of  any  use  to  the 
banks  it  will  be  at  their  command,  and  that  in 
the  mean  time  it  will  be  producing  them  an  in- 
terest.— The  stipulation  can  provide  that  each 
bank  shall  receive  its  advance  at  the  time  it 
resumes  its  payments  in  specie. 

If  you  ' ill  have  the  goodness  to  request  the 
general  committee  of*  the  banks  to  take  this 
subject  into  consideration,  yon  will  greatly 
oblige 

Your  respectful  bumble  servt. 

(Signed,  Sic.) 

This  reasonable  proposition,  however,  was 
unnoticed,  and  the  directors  were  left  lo  re- 
gret the  generous  confidence  w hich  had  sur- 
rendered their  means,  instead  of  imitating 
the  example  of  the  more  eastern  institutions, 
in  withdrawing  all  funds,  in  gold  and  silver, 
before  payments  were  suspended.  They 
are  now  disabled  to  issue  paper  or  conduct 
the  business  of  the  institution— compelled 
to  forego  their  emoluments  and  to  withhold 
from  merchants  in  the  vicinity,  their  ordi- 
nary accommodations,  and  subjected  to  un- 
reasonable losses  and  perpetual  vexations. 

It  will  result  from  this  simple  statement 
of  facts,  that  the  Bridgeport  bank  is  a most 
meritorious  creditor.  Palpable  is  the  injus- 
tice which  it  suffers.  We  will  now  attend 
to  another  consideration,  namely,  whether 
its  preliminary  measures  have  been  just 
and  honourable. 

The  address  made  in  July  last  by  several 
banks  in  Connecticut,  occasioned  the  an- 
swer we  have  seen;  which  assumed  a sort 


of  legislative  independence,  and  seemed  (c 
intimate  that  the  measure  was  intrusive. 
Though  respectful,  it  gave  no  definib  en- 
couragement whatever  to  the  applicants. 
We  mention  the  address  in  this  place,  as  the 
first  of  those  measures  which  bad  a direct 
view  to  such  an  arrangement  with  the  banks 
as  might  avoid  the  necessity  of  coercion. 
But  in  October  last,  Isaac  Bronson,  Ksq* 
the  president  of  the  Bridgeport  bank,  who 
was  deeply  interested  as  a stockholder  and 
bore  a principal  share  in  the  privations  and 
losses  it  sustained — -whose  individual  sacri- 
fices had  been  very  great,  and  who  was 
subjected  to  a constant  loss  of  interest  on  a 
large  amount  of  their  bills,  which  had  been 
taken  at  par  for  specie,  or  in  payment  of 
debts  incurred  by  the  loan  of  Specie,  made 
a claim  on  the  banks,  accompanied  with 
three  propositions,  cither  of  which  he  de- 
clared would  be  satisfactory,  if  accepted. 
They  were  presented  in  writing  through 
bis  attorney.  Of  these  the  following  is  a 
transcript. 

I.  “ To  allow  sis,  or  even  nine  months, 
44  for  the  payment  of  this  demand  on  the 
44  transfer  of  stock  to  trustees  to  be  agreed 
44  on,  to  be  sold  if  not  then  paid. 

II.  “ To  accept  a stipulation  on  their 
44  part  to  reduce  the  loans  of  the  banks  at 
44  the  rate  of  irvo  per  cent,  per  month , to  be 
44  persevered  in,  until  it  shall  result  in  aa 
44  ability  to  pay,  with  a like  transfer  of 
“ stock,  to  be  sold  only  in  case  this  stipula- 
44  tion  be  violated — the  interest  to  be  paid 
“ monthly,  and  the  principal  whenever 
44  (hey  shall  be  able  to  resume  specie  pay- 
44  ments  generally. 

III.  44  To  accept  a stipulation,  that  no 
“ dividends  shall  be  made  until  this  demand 
44  be  satisfied,  the  interest  to  be  paid  month- 
44  lv,  and  stock  to  be  transferred,  in  like 
44  manner,  as  a pledge  for  an  adherence  to 
44  this  stipulation,  but  not  to  be  sold  so  long 
44  as  it  shall  be  observed  with  good  faith.” 

It  is  in  the  first  place  observable,  that 
those  propositions  were  made  m e than  a 
year  after  specie  payments  were  suspended, 
and  nearly  eight  months  after  reasonable 
efforts  had  been  made  to  get  redid  a y a 
loan  in  the  manner  already  stated.  T.  de 
as  they  were,  had  they  required  loe  ns-tcil 
payment  of  specie,  accord  our  to  the  veer 
of  the  contract  on  every  bilk  it  might  hve 
been  said  that  due  regard  was  not  bad  tfo 
the  convenience  of  the  institutions.  Had 
time  been  given  only  on  condition  of  pay- 
ing arrearages  of  interest,  it  would  hav* 


28 


seemed  a reasonable  exaction  ; For  the  city 
j banks,  in  the  resolutions  adopted  in  August, 

| 1814,  expressly  stipulated  to  pay  interest 
| to  each  other , but  wholly  overlooked  the 
meritorious  claims  of  other  institutions. 
The  first  proposition,  authorises  nine 
months  forbearance,  and  merely  exacts  a 
i pledge  to  secure  payment  at  that  period. 
The  two  others  were  not  more  favourable 
to  the  party,  than  to  every  other  creditor, 
and  in  that  respect,  were  grounded,  not  only 
on  fairness,  but  generosity.  They  left  the 
banks  to  pursue  the  courses  suggested, 
just  as  long  as  their  own  interests  and 
discretion  might  prescribe.  The  abate- 
ment of  discounts,  if  adopted,  would  be 
| so  gradual,  as  to  produce  the  smallest 
evil  possible  from  a measure  of  that 
character;  and  the  well  known  means 
of  abreviating  the  period,  which  I have  al- 
ready mentioned,  would  leave  it  in  the 
power  of  the  banks  to  make  the  pressure 
so  light  as  to  be  hardly  perceptible  at  all. 
The  sentiment  so  uniformly  declared,  in 
all  their  resolutions,  that  a decrease  of  mer- 
cantile discounts  was  indispensable,  seemed 
to  make  that  a necessary  article  in  the  pro- 
posals, though  it  was  known  and  insisted 
that  a sale  of  their  stock  would  render  such 
decrease  unnecessary.  All  the  hazard  of 
procrastination,  from  the  very  small  ratio 
ol  the  abatement,  was  to  he  encountered  by 
the  claimants,  while  the  election  of  that 
measure,  in  preference  to  the  others  which 
were  submitted,  or  in  preference  to  selling 
their  stock,  must  rest  solely  with  the  banks 
themselves.  It  they  had  the  regard  which 
they  professed  for  the  mercantile  interests 
ot  the  city,  and  considered  them  endanger- 
ed by  the  two  per  cent  abatement  of  dis- 
counts, the  third  proposition  relieved  them 
from  all  painful  severities  of  that  sort,  while 
it  was  enforced  by  their  love  of  justice,  and 
would  evince  the  sincerity  of  their  profes 
sioris.  It  is  not,  indeed,  to  be  doubted,  if 
any  confidence  is  to  be  placed  in  the  most 
respectable  asseverations,  that  of  those  two 
proposals,  the  last  would  have  been  prefer- 
red by  the  banks.  The  pursuance  of  it 
must  have  inevitably  resulted,  in  an  ability 
to  satisfy,  not  only  this  demand,  but  the 
claims  of  their  creditors  in  general.  The 
mere  suspension  of  dividends  is  not  the  loss 
of  them,  and  their  application  to  the  fulfil- 
j ment  of  positive  engagements,  is  neither 
I nor  unjust.  We  wish  the  public  to 
i subject  these  proposals  to  the  severest  scru-  1 
imy,  and  they  will  find  in  them,  a mode-  j 


ration  hardly  to  be  expected  from  a deeply 
injured  party,  as  well  as  a due  regard  to 
the  interests  and  convenience  of  the  mer- 
cantile community,  and  even  of  the  banks 
themselves.  It  was  on  many  accounts  rea- 
sonable that  pledges  should  he  exacted. 
In  a body,  composed  of  several  independent 
corporations,  and  they,  again,  of  numerous 
individuals ; corporations  already  subject 
to  all  the  obligations  of  mere  promise,  and 
liable  to  legal  coercion  directed  by  gentle- 
men, of  honourable  character  indeed,  but 
subject  to  the  changes  of  elective  office; 
the  same  dependence  on  assurances  is  ne- 
ver exacted,  as  in  cases  of  private  and  in- 
dividual responsibility.  But  for  this  prin- 
ciple, we  never  should  have  witnessed  the 
sevenfold  increase  of  the  arrearages  of  the 
debtor  banks  under  the  strongest  assurances 
of  their  reduction,  nor  the  consequent  con- 
tinuance of  the  piesent  unhappy  cause. 
Societies  consider  their  obligations  as  arti- 
ficial, and  are  less  sensible  than  individuals 
to  the  refinements  of  casuistry.  No  hard- 
ship could  be  involved  in  placing  stock  in 
the  hands  of  trustees,  wdth  power  to  do 
summary  justice,  without  the  delay,  ex- 
pense, and  embarrassment  of  legal  reme- 
dies. It  would  be  no  less  productive  in 
their  hands,  than  in  the  possession  of  the 
several  corporations.  The  trust  might  have 
been  confided  to  the  general  committee, 
with  the  sole  power,  under  either  of  the  two 
last  prohibitions,  of  deciding  on  the  fidelity 
of  the  banks,  or  of  simply  selling  the  stock 
at  the  end  of  six  or  nine  months,  as  men- 
tioned in  the  first.  If  any  bank  had  not 
stock  to  pledge,  it  must  have  been  a credi- 
tor bank  of  course,  and  in  such  case  the 
claimant  consented  to  substitute  the  bills  of 
its  debtors. 

We  trust,  the  public  are  now  satisfied, 
that  the  suits  in  question  were  not  part  of  a 
system  of  speculation  on  bank  paper,  a spe- 
culation rendered  impossible  by  the  nature  of 
the  propositions , but  were  grounded  on  most 
righteous  and  honourable  claims ; and  that 
every  reasonable  attempt  was  made  before 
their  commencement,  to  prevent  a resort  to 
the  la"  s of  the  land.  If  it  was  admissible 
to  make  pronosals  at  all,  can  we  conceive 
of  any,  more  temperate  or  fair  than  were 
made  on  this  occasion?  If  injustice  must 
he  patiently  borne,  'merely  for  the  profit  of 
those  who  inflict  it,  of  what  use  are  the 
i laws  and  institutions!  of  civil  society  ? Is 
1 the  complaint  reasonable,  that  these  suits 
! tend  to  curtail  bank  discounts,  when  the 


21 


consent  of  the  banks  to  suspend  their  own 
dividends  until  they  had  done  justice  to 
creditors,  would  have  superseded  their  use  ? 
creditors  too,  whose  only  error,  was  c#nh- 
denee  in  those  who  resist  their  claims  ? 
So  far  otherwise,  that  the  more  liberal  the 
discounts,  within  any  prudent  limits,  the 
greater  the  means  which  such  a measure 
•would  afford,  and  the  stronger  the  tempta- 
tion to  apply  them.  If  the  emolument  of 
banking  operations  were  consecrated  to 
those  creditors  who  own  a large  portion  of 
the  capitals  employed,  and  who  have 
hitherto  been  denied  a share  in  the  pro- 
ducts ; the  continued  zeal  of  the  banks  for 
mercantile  accommodations,  would  be  no 
less  honourable  than  disinterested  and  just. 

The  public  will  now  have  perceived  how 
destitute  of  foundation  were  the  assertions, 
that  Mr.  Bronson  had  combined  with  an 
“ eastern  faction ” to  embarrass  the  banks, 
by  drawing  off  their  specie  5 and  that  the 


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